- RBI has recognised the Finance Industry Development Council (FIDC) as the official Self-Regulatory Organisation (SRO) for the NBFC sector.
- Move follows RBI’s Omnibus SRO Framework (March 21, 2024) and invite for applications (June 19, 2024).
- Two other applications were not considered as they were incomplete by the deadline.
News Update
The Reserve Bank of India has recognised FIDC as the SRO for Non-Banking Financial Companies (NBFCs). As an SRO, FIDC will work under RBI oversight to promote industry standards, strengthen compliance, facilitate early-warning mechanisms, and act as a structured bridge between NBFCs and the regulator.
What are NBFCs?
NBFCs (Non-Banking Financial Companies) are financial institutions that provide banking-like services such as loans, leasing, housing finance, micro-credit and investment services, but they are not banks. They cannot accept demand deposits, issue cheques on themselves, or run payment/settlement systems. NBFCs are vital to credit access for consumers, MSMEs and under-served regions.
About FIDC (Finance Industry Development Council)
- Who they are: A representative body of asset and loan financing NBFCs registered with RBI, widely regarded as a collective voice of the sector.
- What they do: Engage with RBI and Government on policy, publish guidance, and drive best practices and member conduct standards.
- As an SRO: Will draft and enforce codes of conduct, facilitate member supervision, promote compliance culture, support smaller NBFCs, and share sectoral insights with RBI for better policymaking.
- Why it matters: A recognised SRO can improve transparency, consumer protection, and systemic stability while enabling faster industry coordination.
What changes for NBFCs now?
- Clear standards: FIDC will publish sector-wide standards and model codes that members are expected to adopt.
- Better compliance and oversight: Peer-monitoring and thematic reviews to detect gaps early and escalate material issues to RBI.
- Grievance handling: Frameworks for customer grievance redress and member-discipline, complementing RBI regulations.
- Capacity building: Training, advisories, and templates to help especially small and mid-sized NBFCs comply efficiently.
Timeline and Context
- March 21, 2024: RBI issues the Omnibus Framework for recognising SROs across RBI-regulated entities.
- June 19, 2024: RBI invites applications for NBFC SRO recognition.
- October 3, 2025: RBI recognises FIDC as the SRO for NBFCs; two incomplete applications not considered.
What to watch next
- Membership onboarding: How quickly NBFCs enroll and adopt FIDC’s codes.
- SRO rulebook: Publication of conduct standards, compliance checklists, reporting formats, and disciplinary procedures.
- Consumer outcomes: Impact on complaint resolution times, disclosures, and fair-practices adherence.
Leave a Reply