RBI introduces principles, standards and procedures for mid, large NBFCs
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Keeping in view the principles of proportionality, Reserve Bank of India (RBI) has introduced certain principles, standards and procedures for mid and large non-banking financial companies (NBFCs). The revised regulatory framework for NBFCs, issued in October 2021, had indicated that such entities in the Upper Layer (NBFC-UL) and Middle Layer (NBFC-ML) would be required to have an independent Compliance Function and a Chief Compliance Officer (CCO).
As per the latest notification released by the RBI, NBFCs in the upper layer and middle layer should treat the prescriptions in the circular as a set of minimum guidelines only and accordingly frame their guidelines taking into account their corporate governance framework, the scale of operations, risk profile and organisational structure, among other factors,
Besides, RBI said that compliance function should ensure strict observance of all statutory and regulatory requirements for the NBFCs, including standards of market conduct, managing conflict of interest, treating customers fairly and ensuring the suitability of customer service.
