DRAFT NORMS FOR SROs (Syllabus: GS Paper 3 – Economy)

Context: The Reserve Bank of India (RBI) announced draft omnibus norms for setting up self-regulatory organisations (SROs) by its regulated entities and in those it has proposed to audit the books of such institutions.

Self Regulatory Organisation

• About: An SRO is a non-governmental organisation that sets and enforces rules and standards relating to the conduct of entities in the industry (members).
• Aim: To protect the customer and promoting ethics, equality, and professionalism.

Draft Norms for SROs

• About: The draft norms emphasize the importance of robust governance mechanisms for Self-Regulatory Organizations (SROs), with a specific focus on:
• Independent Board: Advocating the establishment of an independent board for effective governance.
• Transparency: Highlighting the need for transparency within the organizational framework.
• Adherence to Processes: Emphasizing the significance of following well-defined processes.
• Objectives of SROs

oPromotion of Progressive Practices: Encouraging the adoption of progressive practices and conventions.

oGuidance and Support: Providing special attention to offering guidance and support, especially to smaller entities in the sector.

• Sharing Best Practices: Promoting the sharing of best practices aligned with statutory and regulatory policies.
• Dispute Resolution Procedures: The draft suggests that SROs should establish standardized procedures for handling disputes among members.