te RBI directs NBFCs with asset size of over Rs 5,000 crore to appoint CROs with fixed tenure | Zee Business

RBI directs NBFCs with asset size of over Rs 5,000 crore to appoint CROs with fixed tenure

RBI asked NBFCs with asset size of over Rs 5,000 crore to appoint board-approved chief risk officer (CRO) with adequate professional qualification and a fixed tenure.

RBI directs NBFCs with asset size of over Rs 5,000 crore to appoint CROs with fixed tenure
As per the RBI, the CRO shall be a senior official in the hierarchy of an NBFC and shall possess adequate professional experience in the area of risk management. Photo: PTI

The Reserve Bank on Thursday asked NBFCs with asset size of over Rs 5,000 crore to appoint board-approved chief risk officer (CRO) with adequate professional qualification and a fixed tenure. This is being done to augment risk management practices in view of the increasing role of non-banking financial companies (NBFCs) in direct credit intermediation, the RBI said in a notification.
 
"While boards of NBFCs should strive to follow best practices in risk management, it has been decided that NBFCs with asset size of more than Rs 50 billion shall appoint a CRO with clearly specified role and responsibilities," it said.
 
As per the RBI, the CRO shall be a senior official in the hierarchy of an NBFC and shall possess adequate professional qualification/ experience in the area of risk management.
"The CRO shall be appointed for a fixed tenure with the approval of the board," it said and added that the officer can be transferred/ removed from his post before completion of the tenure only with the approval of the board.
 
In case the NBFC is listed, any change in incumbency of the CRO should also be reported to the stock exchanges. Further, the board should put in place policies to safeguard the independence of the CRO. 
In this regard, RBI said the CRO should have direct reporting lines to the MD and CEO/ Risk Management Committee (RMC) of the board.
 
"The CRO shall not have any reporting relationship with the business verticals of the NBFC and shall not be given any business targets. Further, there shall not be any 'dual hatting' i.E. The CRO shall not be given any other responsibility," the RBI added.
Also, all credit products (retail or wholesale) should be vetted by the CRO from the angle of inherent and control risks. The CRO's role in deciding credit proposals shall be limited to being an advisor.
 

Written By: PTI
Updated: Thu, May 16, 2019
10:00 pm
PTI
RELATED NEWS
RBI proposes banks with less than 6% net NPAs to declare dividends RBI proposes banks with less than 6% net NPAs to declare dividends
Nearly 97.38% Rs 2,000 notes returned to banking system; Rs 9,330 cr still with public: RBI Nearly 97.38% Rs 2,000 notes returned to banking system; Rs 9,330 cr still with public: RBI
Reserve Bank continues battle against inflation; all eyes on possible rate cut Reserve Bank continues battle against inflation; all eyes on possible rate cut
Exclusive: Centre plans Rs 5,016 crore incentive to promote RuPay, BHIM-UPI Exclusive: Centre plans Rs 5,016 crore incentive to promote RuPay, BHIM-UPI
Inflation outlook likely to be clouded due to volatile food prices: RBI Governor at MPC meeting Inflation outlook likely to be clouded due to volatile food prices: RBI Governor at MPC meeting

By accepting cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

x