The Reserve Bank of India (RBI) has formally recognised the Finance Industry Development Council (FIDC) as the country’s first Self-Regulatory Organisation (SRO) for the non-banking financial company (NBFC) sector – a significant step towards strengthening governance and accountability in India’s shadow banking ecosystem.
The recognition comes under the RBI’s Omnibus Framework for SROs, introduced in March 2024 to promote self-discipline, ethical conduct, and responsible innovation within regulated financial segments. Among three applications submitted for SRO status in the NBFC domain, FIDC was the only applicant to meet all regulatory criteria, underscoring its institutional capacity and credibility to represent the sector.
Role and Responsibilities
As an RBI-approved SRO, FIDC will set industry-wide standards of conduct, promote voluntary compliance, and facilitate better engagement between NBFCs and the central bank. It will also monitor member adherence to regulatory norms, assist in dispute resolution, and drive ethical practices across the lending and investment ecosystem.
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With nearly 400 member institutions, including NBFC-Investment and Credit Companies (NBFC-ICCs), housing finance firms, NBFC-factors, and infrastructure finance entities, FIDC represents a broad spectrum of the industry. The council now assumes a pivotal role in building trust, transparency, and professional discipline within the sector.
Membership and Compliance
Under the RBI’s guidelines, FIDC must secure at least 10% membership coverage of the total NBFC sector within two years of recognition. The RBI retains the right to review or revoke SRO status if compliance targets are not met or if the body fails to uphold prescribed standards of governance and accountability.
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Industry Reaction
Terming the recognition a “red-letter day” for the sector, Raman Aggarwal, CEO of FIDC, said the council remains committed to fostering responsible lending practices and supporting policy alignment between NBFCs and regulators.
Industry experts view this as a milestone in the evolution of India’s financial system, placing the NBFC sector alongside other self-regulated segments such as microfinance (Sa-Dhan, MFIN) and fintech (FACE). The move is expected to encourage greater collaboration, regulatory consistency, and investor confidence.
Broader Significance
FIDC’s recognition marks an important stride towards the vision of a “Viksit Bharat” – a developed India driven by robust, transparent, and technology-enabled financial institutions. As NBFCs continue to play a critical role in advancing financial inclusion and credit access, the establishment of a formal SRO is seen as a timely reform in India’s evolving financial architecture.
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Disclaimer: This post is for general informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making financial decisions.
