India to examine FinTech regulation, looks into sandbox launch

India’s central Government has set up a special committee to look into making regulations for FinTech more flexible.

The panel, led by the Department of Economic Affairs Secretary Subhash Chandra Garg, will look to help FinTech companies do business in the country by promoting financial inclusion according to an official statement.

Its eight-member panel will find ways of using FinTech in “critical sectors of the economy”, including the financing of micro, small and medium enterprises (MSMEs), delivery of e-services to the vulnerable sections of society, and management of land records and other government services, said an official statement.

The panel includes Ajay Prakash Sawhney, secretary in the ministry of electronics and information technology; Rajiv Kumar, secretary in the department of financial services, and Arun Kumar Panda, secretary in the ministry of micro, small and medium enterprises.

It will also examine the regulatory environment for the country’s FinTech industry, with a view of creating a regulatory sandbox. The panel will also look into international cooperation opportunities in the space with countries like Singapore, UK, China, etc. The committee said it “will develop regulatory interventions, e.g., regulatory sandbox model, that will enhance the role of FinTech in the sectors identified for focused intervention.”

A sandbox enables company to produce a limited roll-out of new products to test compliance and to ensure they do not pose any risk to consumers or to the stability of the sector.

Earlier this year, The Financial Conduct Authority (FCA) in the UK said it is looking for views on the merits of creating a global FinTech sandbox.

Launched in 2016, its sandbox has supported 60 firms in the UK to test their ideas with real customers in the live market under controlled conditions. The UK model reduced the time and cost of getting ideas to market, facilitated greater access to finance for innovators, enabling products to be tested and introduced to market, and ensured appropriate consumer protection safeguards according to the FCA. However, it is currently only open to the UK.

Last year, Hong Kong’s Securities and Futures Commission (SFC) launched a RegTech sandbox to enabled qualified firms to test their regulated activities, while Abu Dhabi Global Market (ADGM) said it is looking for applications for the third cohort of its Regulatory Laboratory (Reglab).

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