RBI To Issue Norms To Ease Launch Of New Products By Fintech Firms
The Reserve Bank of India said it will come out with guidelines to help fintech companies ease introduction of innovative products in the next two months.
There is need to have appropriate supervisory and regulatory framework for development of fintech companies, and protect the interest of consumers and stakeholders, RBI Governor Shaktikanta Das said. “Such framework should address associated risks while keeping in mind the growth requirements of this sector.”
Based on the recommendations of Working Group on Fintech and Digital Banking, the central bank had decided to set up a “regulatory sandbox/innovation hub”. “A regulatory sandbox would benefit Fintech companies by way of reduced time to launch innovative products at a lower cost,” Das said at Niti Aayog's Fintech Conclave 2019. The guidelines will be issued in the next two months.
“A sandbox will have lesser compliance requirements for fintech firms for a short duration until their innovation is tested and ready for launch,” Sameer Aggarwal, founder of Revfin said. “U.K., Canada, Australia, Singapore Hong Kong already have regulatory sandboxes that are live and running.”
These sandboxes, he said, have tested several concepts that have positive customer impact including access to finance, better financial planning, increased savings, and more transparency on financial products.
The sandbox, according to the recommendations, allows live or virtual testing of new products or services, in a controlled testing environment, with or without any regulatory relief. Users can test product’s viability without the need for a larger and more expensive rollout, it said, adding if the product appears to have the potential to be successful, the product might then be authorised and brought to the broader market more quickly.
According to the working group's report, innovation hub will support, advice or guide regulated or unregulated firms in navigating the regulatory framework or identifying supervisory, policy or legal issues and concerns. The innovation hub, according to the panel, will:
- Reduce regulatory uncertainty.
- Reduce the time it takes to bring an innovative product to market.
- Support innovators by providing needed services.
- Improve access to supervisory authorities for financial market operators by creating a central point of contact.
- Play an active role as a catalyst for promoting interaction among financial practices and innovative technologies, research and study, and the needs of the economic society.