Master Circular on Corporate Governance for Non-Banking Financial Companies
The Reserve Bank of India has issued directions on corporate governance for Non-Banking Financial Companies (NBFCs).
The directions cover the following aspects:
Constitution of Committees of the Board: NBFCs are required to constitute three committees – Audit Committee, Nomination Committee, and Risk Management Committee.
Fit and Proper Criteria: Directors of NBFCs must meet the ‘fit and proper’ criteria, which includes integrity, reputation, and competence.
Disclosure and Transparency: NBFCs must ensure transparency in their operations and disclose certain information to the public.
Rotation of Partners of Statutory Auditors/Audit Firm: NBFCs must rotate the partners of their statutory auditors/audit firm every five years.
Framing of Internal Guidelines: NBFCs must frame internal guidelines for the functioning of the committees and the board.
The directions also include annexures on the ‘fit and proper’ criteria for directors of NBFCs and a declaration and undertaking by directors.
Chat with the Master Circular: