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Make proposed regulatory sandbox inclusive, fintech experts tell RBI


MUMBAI: The fintech industry wants the Reserve Bank of India (RBI) to make the proposed regulatory sandbox more inclusive and provide greater operational clarity for startups using the mechanism to help drive innovation in the payments landscape.

Digital Lenders’ Association of India (DLAI), an industry representative body with about 80 fintech companies as members, wants the regulator to consider its suggestions before the final draft is published.

“The present draft framework appears to foreground application-level innovation more than innovation on the core financial product…The purpose of a regulatory sandbox should be to foster innovation across all levels of the financial ecosystem, including the underlying core financial product/service, licensing architecture and the customer facing distribution channel,” DLAI said in a letter to the regulator.

Widening the scope of eligibility from startups to all companies, allowing credit monitoring solutions to be tested, providing unsolicited legal waivers to companies operating in the sandbox, and replacing cohort-based testing model to a roll-over based one were among the suggestions made in the letter, of which ET has seen a copy.

The RBI had, in April, released draft guidelines for stakeholder consultation based on the reports of the Household Finance Committee submitted in July 2017. A regulatory sandbox is a special testing environment where a company can sample new technology solutions on a limited consumer base, with customised regulatory leeway, under the purview of the regulators. Under the proposed model of the Reserve Bank of India, the testing would be done in ‘cohorts’ where a set of specific solutions would be first tested for a pre-set time-period.

Based on the results of the testing, the regulators would gauge the commercial viability of the product and possible regulatory tweaks that can be made to accommodate the solution.

“The process will improve regulators’ reach to common consumers as they would have a direct real-time access to the customer behaviour trends and other data points, which can gauge the applicability of the products being tested,” said Smita Aggarwal, a member of the Household Finance Committee. “This may lead to consumers who are underbanked finding more voice in policy interventions.”





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