Idea behind SROs is not to make them more regulatory'

In March, the Reserve Bank of India came out with a framework on self-regulatory organisations (SROs). Since then, industry bodies in finance have shown interest in setting up SROs. It is early days even as there are concerns over dual membership and SROs' scope. ANISH MASHRUWALA, partner, JSA Advocates and Solicitors (and co-chair of the finance practice and head of its banking & finance group), spoke with Raghu Mohan on these issues in a telephonic interview. Edited excerpts:

- ANISH MASHRUWALA

What is your view on dual membership in SROs?

Let's say I am a member of the Indian Merchants' Chamber and also of the Bombay Chamber of Commerce. I might have different parts of my organisation active in both. Now, it might be that one of the chambers in some situations adopted different positions from the other. And it's always an exchange of ideas where if this is done, you bring it to the notice of the other relevant organisation. In the case of SROs for nonbanking financial companies (NBFCs), this is probably a practice that should be followed, and committees and leaderships would take note of that. So, I think allowing a dual membership is beneficial because we have seen that in other industries and professions.

There may also be general competition between the two SROS, to say that if the practices of one are better at good governance, and it has a more effective voice with the regulator, it is likely to attract better membership in terms of quality than the other. I think having dual membership is good.

Should SROs get to have penal powers over their members?