Invitation of applications for recognition of Self-Regulatory Organisations (SROs) for NBFCs

Current Context: The Reserve Bank of India (RBI) invited applications for recognition of Self-Regulatory Organizations (SROs) to oversee the non-banking financial companies (NBFCs) sector in March 2024 . A maximum of two SROs will be approved.

• Key points about the SRO application process:
• Membership:
• The SRO should have a good mix of NBFC types (NBFC-ICCs, HFCs, and NBFC-Factors).
• At least 10% of members should be smaller NBFCs categorized as NBFC-ICC and NBFC-Factor in the base layer (as per Scale Based Regulatory Framework). This membership requirement must be met within two years of recognition to avoid getting the recognition revoked.
• Net Worth:
• The SRO needs to have a minimum net worth of Rs 2 crore within one year of getting recognized or before starting operations, whichever is earlier.
• This minimum net worth needs to be maintained afterwards as well.
• Application Deadline: September 30, 2024.

Question:

1 What is the minimum net worth requirement for a Self-Regulatory Organizations (SRO) to obtain recognition from the RBI?

• A) Rs 1 crore
• B) Rs 2 crore
• C) Rs 5 crore
• D) Rs 10 crore

Answer: B) The SRO needs to have a minimum net worth of Rs 2 crore within one year of getting recognized or before starting operations, whichever is earlier.