Chief Risk Officer for NBFCs
The Reserve Bank of India (RBI) has asked non-banking finance companies (NBFCs) with an asset size of more than ?5,000 crore to appoint a chief risk officer (CRO).
NBFC’s have been asked to clearly specify the role and responsibilities of the CRO, in view of the increasing role in direct credit intermediation of these companies. The move has gained significance in the backdrop of the IL&FS imbroglio and its ripple impact on NBFCs.
- The CRO should be a senior official in the hierarchy of an NBFC.
- The CRO should possess adequate professional qualification/ experience in the area of risk management.
- If the NBFC is listed, any change in the incumbency of the CRO should also be reported to the stock exchanges.
- NBFCs should put in place policies to safeguard the independence of the CRO.
- CRO should not have any reporting relationship with the business verticals of the NBFC, and should not be given any business targets.
- CRO should not be given any other responsibility.
CRO will be involved in the process of identification, measurement and mitigation of risks and his/her role deciding credit proposals will be limited to being an advisor.
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