Self - Regulatory Organization - Background

Post-Andhra Pradesh crisis in 2010, a high-level committee, known as Malegam Committee, was formed by the Reserve Bank of India (RBI) to thoroughly examine the issues of the microfinance sector. Most of the recommendations of the Malegam Committee were accepted by the RBI by introducing a new category of NBFCs named NBFC-MFIs in Dec 2011, with detailed directions on a gamut of things including a definition of NBFC-MFIs through qualifying assets criterion, prudential norms, pricing of credit and customer protection measures such as pricing of credit, disclosures and multiple-lending and over-lending.

Recommendation of the Malegam Committee ‘for greater responsibility to be placed on industry associations for monitoring of regulatory compliance’ was adopted through a separate SRO guideline issued in Nov 2013 for recognition of industry associations as the Self-regulatory Organization’.

Accordingly, Master Directions for the NBFC-MFIs were revised to include SRO function, as under:

  • All NBFC-MFIs are encouraged to become member of at least one Self-Regulatory Organization (SRO) which is recognized by the Reserve Bank and will also have to comply with the Code of Conduct prescribed by the SRO.
  • The responsibility for compliance to all regulations prescribed for MFIs lies primarily with the NBFC-MFIs themselves. The industry associations/SROs will also play a key role in ensuring compliance with the regulatory framework.

In June 2014, MFIN became the first industry association to be accorded recognition as a SRO by the RBI.

MFIN’s SRO mandate emanates from RBI (SRO Guidelines) and MFIN Bye-laws which clearly lay down the various elements of the MFIN’s SRO functions.

The objective of MFIN’s SRO function is to nurture member NBFC-MFIs towards compliance with RBI Directions & Fair Practice Code, Industry Code of Conduct (CoC) and MFIN Compendium of Directions & Advisories. The priority is to ensure the interest and welfare of the customers as NBFC-MFIs engage with them. In line with RBI Charted of Customer Rights, core principles for ensuring customer interests are as under:


  • Suitable: NBFC-MFI offer micro-credit products to customer which are suitable to customer’s context and need. For this purpose, NBFC-MFI must understand customer’s financial position, needs for credit and repayment capacity to offer suitable product. Special emphasis should be given to contain multiple/over lending. In line with regulations, micro-credit offered should be priced and structured in a way that customer is able to repay without compromising on the necessities of her households. Pricing should include interest rate, processing fee, and administrative charges with respect to credit-linked insurance.
  • Transparent: NBFC-MFI to proactively inform the customer about all details of the product (loan amount, tenor, repayment frequency, interest rate, processing fee, pre-payment/pre-closure fee, delay fee, CGRM, policies and process) and ensure that customer has understood key risks, if any.
  • Interaction: NBFC-MFI to interact with customer in fair and respectful manner, do not discriminate, do not abuse and respect her choices.
  • Privacy: NBFC-MFI respect the privacy of customer information in accordance with the regulation only use this data for purposes specified at the time the information is collected or as permitted by law, unless otherwise agreed with the customer.
  • Grievance Redressal: NBFC-MFI provide a timely and responsive mechanisms to resolve complaints of the customers.

Work Areas

The mandate and objectives of the SRO are implemented through 4 core functions:

Frame Rules and Standards

Within the broad framework provided by the RBI Master Directions for NBFC-MFIs, RBI Fair Practices Code, Industry Code of Conduct (CoC), SRO frame rules, standards and benchmarks for member NBFC-MFIs. These rules and standards were developed after extensive consultation with member NBFC-MFIs and other relevant industry players as required.

Consensus is built to ensure buy-in and adoption amongst member NBFC-MFIs. These rules and standards were then approved by the Board and are reviewed as well as updated on a periodic basis.

Industry Code of Conduct:
MFIN Compendium of Directives and Advisories:

Develop capacities

SRO provides capacity building inputs in order to support member NBFC-MFI’s adherence to regulatory/industry standards. This is done through multiple channels like research, data analytics and benchmarks, guidance notes, evaluations tools, training and workshops etc.

Monitor and Enforce

SRO monitors industry compliance and takes action on non-compliances as and when necessary. Industry and member NBFC-MFIs are monitored through different sources, such as, data from NBFC-MFIs, data from Credit Information Companies (CICs), periodic investigation, peer reporting and independent Third-party Evaluations which are conducted by empanelled agencies.

Instances of lapses and non-compliance are taken-up with the NBFC-MFIs for corrective action. They are also escalated to an Enforcement Committee (EC) and RBI, if required. A well-defined Enforcement Framework guides the ‘monitor and enforce’ function of the SRO in order to ensure a fair, consistent and transparent process which progressively moves the NBFC-MFIs, individually and collectively, towards higher degree of adherence with industry regulations and standards.

Please refer to Framework for SRO Enforcement for more details : Framework for SRO Enforcement

Redress customers’ grievances

Recognition of the SRO status, among other things, required having a grievance and dispute redressal mechanism for the customers of NBFC-MFIs.

This specific mandate was operationalized by starting the Customer Grievance Redressal Mechanism (CGRM) number (a toll-free number 1800 2700 317) by MFIN from July 2015. MFIN’s CGRM gives customers of NBFC-MFIs direct access to the SRO to address their grievances which are not addressed by the NBFC-MFIs to their satisfaction before further escalation to the RBI. Today, MFIN’s CGRM (which began with a single-person team) has evolved into a dedicated 6-member team covering 10 languages and handling over 5,000 calls every month.

‘More details about Framework for MFIN’s CGRM can be found at following document : Framework for MFINs CGRM


Based on guidance provided by the RBI Guidelines and MFIN Bye-laws for the SRO’s functions, the SRO structure consists of management staff and independent governance committees. An overview of SRO structure and details of management and governance committee are given below.


Self-regulation function is managed and coordinated by a 4-member team, led by the Head Self-regulation who also serves as the compliance officer and reports to the RBI.


In addition to the SRO Team, there are two SRO governance committees at MFIN, to effectively carry out the SRO function, particularly in discharge of the enforcement function.

The Enforcement Committee (EC) primarily handles issues of non-compliances and grievances arising from customers requiring redressal.

The Self-regulatory Organization Committee (SROC) provides oversight and direction to all the SRO functions and acts as the appellate body for EC decisions.

In line with standards of governance, both these committees are constituted with majority independent members and chaired by an independent member. However, both committees also have representation from the industry to bring balanced practical perspective.

These committee work under an Enforcement Framework outlined by the Board and the Board gets regular updates on relevant information about their work and decisions.


The SROC provides oversight and directions to all SRO activities and function as the appellate body for EC decisions.

Power and functions

  • SROC is responsible for the proper discharge of the SRO role and of exercising oversight on adherence to regulations and guidelines prescribed by the RBI from time to time, as well as the CoC by Members.
  • The SROC functions will be in line with the RBI guidelines dated 26th November 2013 and any other directions issued in this respect by the RBI from time to time;
  • The SROC will keep the Board informed of all facts and decisions;
  • The SROC will be the appellate body for EC decisions. The SROC can recommend suspension, expulsion and termination of membership, to the Board with a speaking order or in writing. The Board will have the final decision on this;
  • In the event of a dispute between Members, the decision of the SROC will be final and binding .


  • The SROC shall comprise of 5 (five) Members of which 2 (two) shall be from amongst the Elected Members of the Board and 2 (two) shall be from Independent Members on the Board. The remaining 1 (one) member of the SROC shall be an independent person of eminence who is familiar with the financial services industry, whose appointment and remuneration will be approved by the Board. In addition, Chairperson of the Enforcement Committee will be a member to the SROC .
  • The CEO/Secretary will be a non-voting Ex-Officio Member of the SROC (in addition to the five Members).
  • The Compliance Officer shall participate in the meetings of the SROC and act as a Member Secretary of the SROC but will not have any voting rights.
  • All Members of the SROC will have to fulfil the “Fit and Proper’’ criteria as stipulated by the RBI from time to time.
  • SROC at its discretion may invite any person relevant to the microfinance sector to participate in its deliberations.

Other terms

  • SROC Chair: After every AGM, the SROC will elect a Chairman of the SROC from amongst the 2 (two) Independent members of the Board.
  • Tenure: The tenure of the Elected and Independent Members of the Board on the SROC shall be co-terminus with the tenure of their appointment on the Board. The term of the independent person of eminence shall be 3 (three) years or such other term as may be decided by the Board from time to time.
  • Quorum: The quorum of the meetings of the SROC shall be 3 (three) Members, of which at least 2 (two) shall be Independent Members.
  • Sitting Fee: The Independent Members of the SROC, shall be paid a sitting fee as fixed by the Board from time to time.

Current composition

Currently SROC has members as under:


Name Position on SROC Background
Veena Mankar Member (As Chair, EC) Chairperson, Swadhaar FinServe Pvt. Ltd.
Ragini Bajaj Choudhary Member (Independent member) CEO, Graymatters Cap
Dibyajyoti Pattanaik Member (Elected member of the MFIN Board) Director, Annapurna Finance Pvt Ltd
Dr. Alok Misra Chair (Independent member of the MFIN Board) Professor- Public Policy & Governance, MDI
Navin Kumar Maini Member (Independent member of the MFIN Board) Ex Dy CMD, SIDBI
Rakesh Dubey Member (Elected member of the MFIN Board) CEO, SV Creditline Limited.
Harsh Shrivastava Member (Non-voting, ex-officio) CEO, MFIN
Sugandh Saxena Member Secretary (Non-voting) Head SRO, MFIN

Enforcement Committee (EC)

Enforcement Committee (EC) primarily handles issues of non-compliances and grievances arising from customers requiring redressal.

Power and Functions

  • Proper enforcement of the CoC and exercising oversight adherence to regulatory norms prescribed by the RBI / Government / any other regulatory authority,
  • The EC will function under the overall supervision of the SROC and will report into the SROC;
  • Primarily handle issues arising out of internal disputes between the Members and grievances arising from clients requiring redressal. Standard Operating Procedures (SoP), duly approved by the SROC, will define the EC’s role as an entity that handles dispute resolution between Members and client grievance redressal issues;
  • The EC can take the following actions subject to the guidelines approved by the Board:
    - Issue Warning
    - Issue Censure;
    - Levy fines for violations as laid down in the RBI’s Fair Practices Code and the Industry CoC;
    - Recommend suspension/termination of membership of any Member to the SROC;
  • An appeal against the decision of the EC will lie with the SROC. Such an appeal will have to be submitted in writing. The decision of the SROC will be in consultation with the Governing Board and will be final.


  • The EC shall comprise of 5 (five) members, of which 2 (two) shall be elected by the authorized representatives in the AGM from amongst the Members, and 3 (three) persons of eminence will be appointed by the Board, which will be other than the Independent Members the Board.
  • The Compliance Officer shall be a non-voting Ex-Officio Member of the EC and a member of the SRO staff will act as Secretary of the EC.
  • The “Fit and Proper” criteria will be applicable to all Members of the EC.

Other terms

  • Tenure: The tenure of the Elected members of the EC shall be for 1 (one) year. However, they would be eligible for re-contesting the elections. The term of Independent Members of the EC shall be 3 (three) years. From the date of appointment to the EC.
  • Quorum: The quorum of the meetings of the EC will be 3 (three), out of which at least 2 (two) will be independent appointed by the Board.
  • EC Chair: After every AGM, the EC will elect a Chairman of the EC from amongst the 2 (two) Independent members.
  • Sitting Fee: The Independent Members of the EC, shall be paid a sitting fee as fixed by the Board from time to time.

Current composition

Currently EC has members as under:


Name Position on EC Background
Veena Mankar Chair (Independent) Chairperson, Swadhaar FinServe Pvt. Ltd.
Haresh Kulshrestha Member (Independent) Ex CGM, RBI
Arnab Roy Member Independent Ex Principal CGM and Regional Director, RBI
Anujeet Vardkar Member (Elected industry representative) CEO, Svatantra Microfin Pvt. Ltd.
Mr. Sadaf Sayeed Member (Elected industry representative) CEO, Muthoot Microfin
Sugandh Saxena Member (Non-voting, ex-officio) Head Self-regulation & Compliance Officer, MFIN
Sheetal Prasad Member Secretary (Non-voting) AVP, Self-regulation & Compliance, MFIN

Reporting to RBI

SRO does detail quarterly reporting to the RBI on the industry including operational and financial trends, customer complaints, non-compliance, actions taken and emerging issues among other things.

Relevant Regulatory Guidelines/MFIN Publications

RBI Master Directions for NBFC-MFIs:

SRO Guidelines:

RBI Letter for the recognition of MFIN as SRO (pdf)
Pricing of Credit:

RBI Fair Practices Code for NBFCs:

Priority Sector Lending:

Charter of Customer Rights:

Directions on Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs:

KYC Directions for NBFCs:

Consolidated list of returns prescribed by RBI for banks/NBFCs/OFIs:

Membership of Credit Information Companies (CICs):

Data Format for Furnishing of Credit Information to Credit Information Companies and other Regulatory Measures:

Industry Code of Conduct :
Compendium of MFIN Directives and Advisories:

Guidance Note on Disclosure to Customers:

Guidance Note on Customer Grievance Redressal Policies:


Sugandh Saxena
Head, Self - Regulatory & Compliance Officer
Sheetal Prasad
AVP Self Regulation and Compliance
Jay Tripathi
AVP Regulation and Surveillance
Sankalp Tripathi
AVP Grievance Redressal
Rahul Jauhari
Customer Grievance Redressal Officer