The RBI has asked all shadow banks with a size of over ₹5,000 crore to appoint chief risk officers (CROs) with clearly specified roles and responsibilities. “The CRO shall be a senior official in the hierarchy of an NBFC [non-banking finance company] and shall possess adequate professional qualification/ experience in the area of risk management,” the RBI said, adding that the CRO should be appointed for a fixed tenure with the approval of the board.

Removal or transfer will need the board’s approval and has to be reported to the regulator.

“The CRO shall have direct reporting lines to the MD & CEO/ Risk Management Committee (RMC) of the Board. In case the CRO reports to the MD & CEO, the RMC/ Board shall meet the CRO without the presence of the MD & CEO, at least on a quarterly basis,” the RBI added.