RBI issues final framework for regulatory sandbox to enable innovations in the financial technology space
New Delhi, Aug 14 (KNN) The Reserve Bank of India (RBI) has issued the final framework for regulatory sandbox in order to enable innovations in the financial technology space.
The Regulatory Sandbox allows the regulator, the innovators, the financial service providers (as potential deployers of the technology) and the customers (as final users) to conduct field tests to collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and containing their risks.
It can provide a structured avenue for the regulator to engage with the ecosystem and to develop innovation-enabling or innovation-responsive regulations that facilitate delivery of relevant, low-cost financial products.
The Regulatory Sandbox is an important tool which enables more dynamic, evidence-based regulatory environments which learn from, and evolve with, emerging technologies.
RBI said the objective of the sandbox was to foster responsible innovation in financial services, promote efficiency and bring benefit to consumers.
The Sandbox is, at its core, a formal regulatory program for market participants to test new products, services or business models with customers in a live environment, subject to certain safeguards and oversight.
The proposed financial service to be launched under the Regulatory Sandbox should include new or emerging technology, or use of existing technology in an innovative way and should address a problem and bring benefits to consumers, said RBI.
RBI will launch the sandbox for entities that meet the criteria of minimum net worth of Rs 25 lakh as per their latest audited balance sheet.
The entity should either be a company incorporated and registered in the country or banks licensed to operate in India.
While money transfer services, digital know-your customer, financial inclusion and cybersecurity products are included, crypto currency, credit registry and credit information have been left out.