RBI asks large non-banking financial cos to appoint CROs with fixed tenure
| Date :17-May-2019 |
Business Bureau:
This is being done to augment risk management practices in view of increasing role of NBFCs in direct credit intermediation, the RBI stated
THE Reserve Bank of India 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 Reserve Bank of India, 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 non-banking financial company 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. 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 Reserve Bank of India added.