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.