Mumbai
The Reserve Bank of India on Thursday proposed fintech start-ups could set up regulatory sandbox or live-testing of innovative products and services in segments such as retail payments, money transfer, artificial intelligence and data analytics in the financial sector.
A working group set up by the RBI had recommended introduction of an appropriate framework for an RS within a well-defined space and duration where the financial sector regulator will provide the requisite regulatory guidance to increase efficiency, manage risks and create new opportunities for consumers.
In line with the recommendation, the central bank has released draft ‘Enabling Framework for Regulatory Sandbox.’
“The proposed financial service to be launched under the RS should include new or emerging technology, or use of existing technology in an innovative way and should address a problem, or bring benefits to consumers,” the draft said.
According to the draft, the target applicants for entry to the RS are financial technology (fintech) firms which meet the eligibility conditions prescribed for start-ups by the government.
The innovative products and services which could be considered for testing under RS include retail payments, money transfer services, marketplace lending, digital KYC and financial advisory services.
Innovation in wealth management services, digital identification services, smart contracts, financial inclusion products and cybersecurity products could also be tested.
Innovative technologies that could be brought under RS include mobile technology applications (payments, digital identity), data analytics, application programme interface, applications under block chain technologies and artificial intelligence and machine learning applications.
Highlighting the benefits of RS, the draft said the first and foremost is that it fosters “learning by doing.”
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