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RBI asks large NBFCs to appoint CROs with fixed tenure

Press Trust of India  |  Mumbai 

The Reserve Bank on Thursday asked with asset size of over Rs 5,000 crore to appoint board-approved (CRO) with adequate professional qualification and a fixed tenure.

This is being done to augment practices in view of the increasing role of companies (NBFCs) in direct credit intermediation, the RBI said in a notification.

"While boards of should strive to follow best practices in risk management, it has been decided that with asset size of more than Rs 50 billion shall appoint a with clearly specified role and responsibilities," it said.

As per the RBI, the shall be a in the hierarchy of an NBFC and shall possess adequate professional qualification/ experience in the area of

"The shall be appointed for a fixed tenure with the approval of the board," it said and added that the 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/ Committee (RMC) of the board.

"The CRO shall not have any reporting relationship with the verticals of the NBFC and shall not be given any 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

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 16 2019. 20:41 IST