Key Terms & Concepts — UPSC Mains
NFRA
"An independent regulator established under the Companies Act, 2013 to oversee auditing standards and discipline auditors of public interest entities"
The National Financial Reporting Authority (NFRA) is an independent regulatory body established under Section 132 of the Companies Act, 2013, constituted by the Central Government in October 2018. It oversees compliance with accounting and auditing standards, monitors the quality of audits of listed companies and large unlisted companies (public interest entities), investigates professional misconduct by auditors and audit firms, and can impose penalties including debarment. NFRA replaced the oversight functions of the Institute of Chartered Accountants of India (ICAI) for public interest entities, addressing the conflict of interest inherent in a self-regulatory model. The Corporate Laws Amendment Bill 2026 proposes to strengthen NFRA by granting it the status of a body corporate (new Sections 132A to 132K) with power to sue and be sued, and imposing fines of up to Rs 25 lakh for non-compliance.
NFRA is relevant for UPSC GS-3 (corporate governance, financial regulation) and connects to the broader topic of regulatory reform and ease of doing business. The 2026 Amendment Bill's proposal to strengthen NFRA makes this a current affairs-rich term.
- 1 Established under Section 132 of the Companies Act, 2013
- 2 Constituted by Central Government notification in October 2018
- 3 Oversees auditing standards for listed companies and large unlisted companies
- 4 Can investigate professional misconduct and debar auditors for up to 10 years
- 5 Replaced ICAI's oversight role for public interest entities
- 6 Corporate Laws Amendment Bill 2026 proposes body corporate status with enhanced powers
- 7 NFRA Chairperson and members appointed by Central Government
The Corporate Laws Amendment Bill 2026 proposes new Sections 132A to 132K to grant NFRA body corporate status and impose fines up to Rs 25 lakh for failure to furnish information.