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

News-CRUX-10     22nd December 2023        

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.
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