RBI asks large NBFCs to appoint CROs with fixed tenure

The country’s shadow banks with more than Rs 5,000 crore ($714 million) in assets must appoint a chief risk officer (CRO), the central bank said on Thursday, as it tightens regulations after a series of defaults by a single lender last year. “With the increasing role of NBFCs in direct credit intermediation, there is a need for NBFCs to augment risk management practices,” the RBI said in a statement. NBFCs must now appoint an independently functioning CRO with clearly specified responsibilities for a fixed tenure, and who cannot be removed without board approval, the central bank said. It did not give a deadline for firms to comply with the regulation. Last year, the government took control of IL&FS after its defaults triggered fears about contagion in India’s financial sector.