The Reserve Bank of India has released draft guidelines for a regulatory sandbox in the wake of a review into the implications of FinTech innovation.
A regulatory sandbox (RS) usually refers to live testing of new products or services in a controlled regulatory environment, for which regulators may permit certain regulatory relaxations for the purpose of the testing.
The policy allows regulators to obtain first-hand empirical evidence on the benefits and risks of emerging technologies and their implications, enabling them to take a considered view on the regulatory changes or new regulations that may be needed to support useful innovation, while containing the attendant risks.
Users of an RS can also test a product’s viability without the need for a larger and more expensive roll-out.
RBI said the target applicants for entry to the RS are FinTech companies innovating in areas where there is absence of governing regulations, where there is a need to temporarily ease regulations for enabling the proposed innovation, or where the proposed innovation shows promise of easing/effecting delivery of financial services in a significant way.
It added that it expects to being the testing process with between 10 and 12 businesses.
Subsectors listed by the RBI as having potential for involvement in testing include, retail payments, money transfer services, marketplace lending, digital KYC, financial advisory and wealth management services, as well as digital ID and cybersecurity.
Comments on the draft guidelines – called “Enabling Framework for Regulatory Sandbox” – are invited from stakeholders by May 8.
Copyright © 2019 RegTech Analyst
Copyright © 2018 RegTech Analyst
