Governance requirements for NBFCs have been less rigorous as compared to banks. Under SBR, some steps to institute an enhanced governance framework for NBFCs in the Middle and Upper Layers have been suggested. These changes pertain to key managerial personnel, appointment and qualification of independent directors, constitution of board committees, compensation guidelines and disclosures.
However, while governance structures within an entity can be enforced through legislation or regulations, responsible governance practices cannot. These need to be built by developing appropriate governance culture and traditions. All of us would agree that the governance is more of a cultural issue than a regulatory issue.