Regulatory sandbox should cover big companies, too: Fintech firms
RS is a controlled environment for commercial testing of new technology with limited regulations and customer exposure.
The draft was released for stakeholder comments on Thursday.
Incidentally, an RS is a controlled environment for commercial testing of new technology with limited regulations and customer exposure.
The RBI draft is based on recommendations from an inter-regulatory committee headed by a former executive director of RBI, Sudarshan Sen. The working group, constituted in July 2016, has members from all major financial regulators such as RBI, Sebi, IRDA and NPCI.
“Regulatory sandboxes have been used in most advanced economies to test the commercial viability and regulatory scope of any new technology. Even while this method has been used by some major banks in India before, a major regulator testing it would be hugely beneficial for the growth of entire fintech ecosystem,” said Mandar Agashe, founder of Pune-based Sarvatra Technology which provides ATM-switch technology for banks.
“However, the regulators should also have opened the sandbox for established companies as well and not just start-ups since it would have widened the scope of innovations. A lot of fintech companies would have benefited from the findings of operating in such a controlled environment,” he said.
The draft released by RBI said it would look for technology solutions “which should highlight an existing gap in the financial ecosystem” and provide suitable solutions in avenues such as payments interface, data analytics and blockchain. The application would be open only for registered Indian start-ups with a minimum worth of ?50 lakh.
“Fit and Proper criteria for promoters and directors is a welcome move as it will prevent unscrupulous operators from entering the RS and preserve the sanctity of the initiative,” said Anurag Jain, CEO, Kred X, a digital invoice discounting company.