The Reserve Bank of India (RBI) Governor has called upon fintech entities to establish a Self-Regulatory Organisation (SRO). An SRO is a non-governmental entity responsible for defining and enforcing industry-specific rules and standards among its member organizations. The primary objective of an SRO is to safeguard customers and promote ethical conduct, equality, and professionalism within the industry. SROs facilitate collaboration with all stakeholders to create regulations and serve as intermediaries between their members and regulatory bodies like the RBI. They set minimum benchmarks, offer training, conduct awareness programs, and establish uniform grievance redressal mechanisms.
Facts/Terms for UPSC Prelims
- Self-Regulatory Organisation (SRO): An SRO is a non-governmental organization tasked with establishing and enforcing industry-specific rules and standards among its member entities. Its primary purpose is to promote ethical behavior, protect customers, and maintain professionalism within the industry.
- RBI (Reserve Bank of India): The Reserve Bank of India is India’s central banking institution responsible for regulating the country’s monetary and financial systems. It plays a crucial role in managing the nation’s currency, controlling inflation, and supervising financial institutions.
- Fintech: Fintech, short for financial technology, refers to companies and technologies that leverage innovation to enhance and streamline financial services. This sector encompasses digital payments, online lending, blockchain, and other technology-driven financial solutions.
- Grievance Redressal: Grievance redressal is the process of addressing and resolving complaints or disputes raised by customers or stakeholders. In this context, an SRO establishes a framework to handle grievances uniformly across its member organizations.
- Ethics in Finance: Ethics in finance refers to adhering to moral principles and values when conducting financial transactions and managing financial services. It involves maintaining transparency, fairness, and integrity in all financial dealings to build trust and confidence among stakeholders.