Reserve Bank of India Allows Fintech Companies, Financial Institutions to Set up Regulatory Sandbox
The RBI on Tuesday permitted startups, banks and financial institutions to set up regulatory sandbox (RS) for live testing of innovative products in areas like retail payments, digital KYC and wealth management.
RS usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain relaxations for the limited purpose of the testing. The RS allows the regulator, innovators, financial service providers and customers to conduct field tests to collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and containing their risks.
Releasing the ‘enabling framework for regulatory sandbox’, the RBI said the RS fosters ‘learning by doing’ on all sides and regulators obtain first-hand empirical evidence on the benefits and risks of emerging technologies and their implications.
Photo courtesy of Pabak Sarkar.