Highlights of Fintech Policy Roundtable on RBI’s Regulatory Sandbox

India FinTech Forum organised a Fintech Policy Roundtable to discuss the RBI’s Regulatory Sandbox at S P Jain School of Global Management. It was attended by CXOs of various fintech firms and the discussion was moderated by Mr. Sameer Jaini, Founder – The Digital Fifth. These discussion points will be shared with RBI.

Key summary points of discussion were :
  • Legal waiver requirements need to be clarified further as there are no clear contexts defined which could lead to legal issues.
  • Data availability in Regulatory Sandbox has not been covered. A few mentioned that banking data provided in a Regulatory Sandbox could provide better use cases to build and tested. The availability of data by Banks or any other parties needs to comply with security & privacy requirements.
  • Integration of RBI’s Regulatory Sandbox with other sandboxes was also discussed.  Proposed Regulatory Sandbox framework does not have any provision on the availability of other sandboxes or access to other sandboxes.
  • Many people felt that criteria defined for fintech participants on Regulatory Sandbox may allow only established players while startups in early stages may not able to take advantage of the sandbox.
  • Security and infrastructure requirements for startups were also discussed. Framework document covers about adherence to security & infrastructure requirements but same is silent on details of requirements.
  • There were lots of discussions around on the negative list and excluding some of the areas like credit information, credit registry. The industry had witnessed lots of innovations taking place in the credit side of the business. Inclusion of this in the negative list may impact some of the use cases. It was proposed that the negative list should be reviewed.
  • It is proposed to increase the cohort size upto 10-12. It is felt that cohort size should be larger as India has too many players working on different use cases. Limiting the cohort size may delay the viability of innovation.
  • Restriction on technologies covered as part of the regulatory framework should be relaxed as innovations are taking place in wider area of technologies too such as RPA, Augmented Reality / Video Reality (AR/VR) etc.

Please write to us at info@indiafintech.com in case you wish to add some other points to the above discussion or feel free to comment below.

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1 Response

  1. Chad Hensler

    Working over the past three years with Indian and Canadian SME’s, I’ve noticed that one of the biggest pain points is sending or receiving international foreign currency transactions.

    Quite simply, the current regulatory framework precludes innovation and makes it difficult and costly for Indian SMEs to receive payments and pay their international vendors. We all know the pain and uncertainty of using SWIFT wire transfers.

    This area of payments is fertile ground for innovations that could meet the objectives of regulation (KYC, money laundering monitoring, etc.) and could be proven within the sandbox.

    Two simple suggestions that will help Indian SMEs compete, match regulatory norms in other countries, and create room for innovation by Indian FinTech companies:

    1. Allow experimentation with the Forward Inward Remittance Certificate (FIRC) process to enable non-banks to process transactions and submit information to relevant authorities; and,

    2. Allow pooling of transactions through existing transfer mechanisms, provided the FinTech can provide the same identical reporting information as the banks are required to provide. This would enable the existing banking infrastructure to be used to move and exchange money, while the FinTech can aggregate multiple transactions and generate economies of scale. At the same time, the FinTech can provide all the detailed information on each individual transaction to meet regulatory requirements.

    If the area of international payments is opened up for experimentation within the sandbox, I’m convinced that Indian SMEs and consumers will be the long-term beneficiaries.

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