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RBI tightens oversight of NBFCs, UCBs
Why is it in news?
- RBI announced the introduction of risk-based internal audit norms for large urban cooperative banks (UCBs) and non-banking financial companies (NBFCs).
- The announcement by RBI is a part of measures aimed at improving governance and assurance functions at supervised entities.
Background:
- The significance of NBFCs is growing and their interlinkages with different parts of the financial system had made it imperative to enhance the sector’s resilience.
- We have seen issues regarding governance and mismanagement among NBFCs in past.
Key measures to be taken by RBI:
- RBI to harmonise the guidelines on appointment of statutory auditors for commercial banks, UCBs and NBFCs.
- This will improve the quality of financial reporting.
- It had been decided to put in place transparent criteria for the declaration of dividends by different categories of NBFCs.
Digital payments:
- RBI has proposed to issue Digital Payment Security Controls directions for the regulated entities.
- Aim: To significantly improve the ecosystem of digital payment channels with robust security and convenience for users.