RBI grants Self-Regulatory Organisation status to Finance Industry Development Council (FIDC) to oversee NBFCs | Current Affairs | Vision IAS
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RBI grants Self-Regulatory Organisation status to Finance Industry Development Council (FIDC) to oversee NBFCs

Posted 04 Oct 2025

2 min read

Article Summary

Article Summary

The RBI has granted Self-Regulatory Organisation status to FIDC, enabling better governance, sector development, and risk management for NBFCs through structured oversight and compliance mechanisms.

FIDC is a representative body of non-banking financial companies (NBFC) registered with the RBI. 

  • Granting SRO status to FIDC will ensure better governance for NBFCs

About Self-Regulatory Organisation

  • Objective: SRO is expected to adhere to a set of overarching objectives for betterment of the sector they represent, foster advancement and address critical industry concerns within the broader financial system. 
  • Legal Backing: RBI’s Omnibus Framework for recognising Self-Regulatory Organisations (SROs) for Regulated Entities (REs), 2024
  • Eligibility of SROs: 
    • An SRO shall be setup as a not-for-profit company registered under Section 8 of the Companies Act, 2013.
    • It should have adequate net worth, sufficiently diversified shareholding (no entity shall hold 10% or more of its paid-up share capital) and must represent the sector.
  • Responsibilities of SROs:
    • Towards members: Frame a code of conduct, establish a grievance redressal and dispute resolution/ arbitration framework, etc.
    • Towards Regulator: Ensuring regulatory compliance, promote sector development, foster innovation and detect early warning signals.
  • Governance framework:
    • Articles of Association (AoA)/ bye-laws shall provide for manner of functioning of Governing Body and specify the functions of SRO.
    • At least one-third of members in Board of Directors including Chairperson shall be independent.

About Non-Banking Financial Company

  • Registration under Companies Act, 1956.
  • Objective: Engaged in lending activities, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority, etc. but excludes institutions mainly involved in agriculture, industrial activity, trading goods (except securities), and providing any services and sale/purchase/construction of immovable property.
  • Different from banks, as they cannot accept demand deposits (accepts only term deposits), are not part of payment & settlement system, and cannot issue cheques drawn on themselves.
  • Status: More than 9000 NBFC are registered with RBI (as of 2024)
  • Tags :
  • Companies Act, 1956
  • Finance Industry Development Council (FIDC)
  • Non-Banking Financial Company (NBFC)
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