RBI recommends Standalone Data Protection law-regulatory sandbox for Fintech cos
Mumbai, Feb 9 (KNN) The Reserve Bank of India (RBI) had set up an inter-regulatory Working Group under the chairmanship of Sudarshan Sen, Executive Director, RBI to study the entire gamut of regulatory issues relating to FinTech and Digital Banking in India, a report in this regard was release by the bank recently.
In its report, the RBI recommended introducing a ‘regulatory sandbox’ to foster financial technology innovation in the country. The report also recommended a data protection law to be introduced for the sector.
Commonly referred as a safe zone to test fintech innovation, sandbox is a hub where regulators enable limited roll-out of new products to customers. The prime focus of sandbox is to ensure that new product does not pose any risk to consumers or to the stability of the sector.
RBI in its report said that an appropriate framework may be introduced for “regulatory sandbox/innovation hub” within a well-defined space and duration where financial sector regulators will provide the requisite regulatory support, so as to increase efficiency, manage risks and create new opportunities for consumers in Indian context similar to other regulatory jurisdictions.
The RBI panel further suggested the need for a self-regulatory body for fintech companies and a standalone data protection law in India.
According to the report, in the 2013-2014 period, the fintech industry in country expanded by over 282 per cent to reach $450 million in 2015.
At present over 400 such firms are operating in the country and their investments are expected to grow by 170 per cent by 2020.
The Committee had representation from all the financial sector regulators, namely, Reserve Bank of India, Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA), as also National Payments Corporation of India (NPCI), select banks and a rating agency, the bank said on its website. (KNN/DA)