Select Your Location
On 16th May, 2019 the Reserve Bank of India (RBI) made it mandatory for Non-Banking Financial Companies having asset size more than Rs. 5,000 cr to appoint Chief Risk Officer (CRO) to ensure risk management practices. This step has been taken to inundate the fear of liquidity crisis in the NBFC sector as the role of NBFCs is increasing day by day.
Here are the following
requirements which need to be fulfilled for the appointment of Chief Risk
Officer (CRO) in NBFC:
Such officer shall be involved in the process of risk identification and risk mitigation. Besides this, CRO will inspect credit product of the NBFCs whether retail or wholesale. However, the role of the CRO will be limited to being an advisor in deciding credit proposals. In NBFC there will be a voting right with the CRO. A committee will be structured for clarification on high value loans with CRO. Other members of the committee will also be liable for the credit proposal aspects.
As per the RBI, The reporting of the Chief Risk Officer (CRO) will be directly to the managing director (MD) & CEO/Risk Management Committee (RMC) of the board. While, in case reporting is made to the MD & CEO then there will be quarterly meeting of the CRO with the Risk Management Committee (RMC) / board without the presence of the MD & CEO.
The transfer or removal can took place ever before the completion of the prescribed tenure by taking the approval of the board. However, such removal or transfer has to be reported to the “Department of non-banking supervision” of the regional office of the RBI under whose jurisdiction such NBFC is incorporated.
As you know after Infrastructure Leasing & Financial Services (IL&FS) Crisis, NBFCs are under stress which is creating panic in the financial market of India. In IL&FS case the asset liability mismatch was exposed as NBFCs were borrowing short term loans to issue long term loans.
Since then, it has become struggle for NBFCs to get funds for their operations because now banks and mutual funds take care when it comes to lending to NBFCs.
Therefore cost of borrowing is quite high for NBFCs. This forced them to get relayed upon retail bond issuances, external commercial borrowings, masala bonds, and funds securitization. This step was necessary to be taken by the authority to mitigate the risk.
Soniya is a dedicated legal professional with a flair for reading & writing to keep herself updated with the latest economical developments. She has worked on projects related to IPR & Corporate laws which have given her diversity in work and a chance to blend her subject knowledge with its real-time implementation, thus enhancing her skills.
Tax planning is a continuing effort and a management strategy for ensuring the minimization of...
On 18th May 2023, the Securities Exchange Board of India (SEBI) released a Consultation Paper o...
Infrastructure and real estate have been regarded as India's "sunshine sector" since the turn o...
On 22nd May 2023, the Central Board of Direct Taxes (CBDT) issued a new circular under secti...
Anyone can have different sources of income. With globalization and the opening up of economies...
The Reserve Bank of India (RBI) is crucial in regulating NBFC, including branch openings and cl...
In India, Non-Banking Financial Companies are subject to certain restrictions from taking publi...
It's usually a good idea to diversify the assets in your financial portfolio, especially during...
A nation is being built by the non-banking finance company through the development of wealth, t...
A corporate entity known as a portfolio manager complies with a contract or agreement with the...
Are you human?: 8 + 3 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
The Kerala High Court made a ruling that even if an entity’s NBFC license has been stripped, it shall continue to...
08 Nov, 2021
A nation is being built by the non-banking finance company through the development of wealth, the creation of jobs,...
24 May, 2023
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!