New Delhi, Mar 25 (KNN) The Reserve Bank of India (RBI) will soon set up a ‘Regulatory Sandbox’ for FinTech Companies, for which guidelines will be issued in the next two months.

The above statement was made by Shaktikanta Das, the RBI Governor while delivering a keynote address at the NITI Aayog’s FinTech Conclave here.

He said “A Regulatory Sandbox would benefit FinTech companies by way of reduced time to launch innovative products at a lower cost.

The Reserve Bank’s working group on FinTech and digital suggested the introduction of a 'regulatory sandbox/innovation hub' within a well-defined space and duration to experiment with FinTech solutions, where the consequences of failure can be contained and reasons for failure analyzed, stated Das.

Speaking during the conclave, Das pointed “FinTech has the potential to reshape the financial services and financial inclusion landscape in India in fundamental ways. It can reduce costs and improve access and quality of financial services.”

He further added that the Reserve Bank has encouraged banks to explore the possibility of establishing new alliances with FinTech firms as it could be pivotal in accelerating the agenda of financial inclusion through innovation.

Besides this, Das pointed that invoice trading is another nascent area of FinTech application in India. It assists MSMEs which often have working capital and cash flow problems due to delayed payments.

The Reserve Bank has set up the Trade Receivables Discounting System (TReDs), which is an innovative financing arrangement where technology is leveraged for discounting bills and invoices. Three entities have been authorised for this purpose and the volumes are slowly gaining traction, Das added.

He asserted “In order to ensure an orderly development of FinTech, to streamline their influence into the financial system, to protect the customers and to safeguard the interest of all the stakeholders, we need to have appropriate regulatory and supervisory frameworks.” (KNN/YV)