The Reserve Bank of India (RBI) on Monday introduced a framework for the recognition of self-regulatory organizations (SROs) in financial markets, setting a minimum eligibility threshold of ₹10 crores. This move aims to expand market participation, enhance user protection, and promote fair conduct in financial markets.
As the number and scale of Regulated Entities (REs) grow, alongside the adoption of innovative technologies and greater customer reach, the RBI recognized the need for improved industry standards. The introduction of SROs is expected to address this by helping to develop and ensure adherence to best practices among financial market participants.
SROs will serve as intermediaries between their members and the regulator, ensuring compliance with regulatory guidelines, providing early warning systems, and fostering innovation. Additionally, SROs will frame and enforce a code of conduct for their members, offering guidance and support, particularly to smaller entities. The goal is to align industry practices with statutory and regulatory policies, thereby improving overall market standards and protecting stakeholder interests.
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