Featured Product

    RBI Finalizes Enabling Framework for Regulatory Sandbox in India

    August 13, 2019

    RBI published the final enabling framework for the regulatory sandbox in India, post a consultation from April 18, 2019 to May 08, 2019. According to RBI, the objective of the regulatory sandbox is to foster responsible innovation in financial services, promote efficiency, and bring benefit to consumers. The regulatory sandbox is, at its core, a formal regulatory program for market participants to test new products, services, or business models with customers in a live environment, subject to certain safeguards and oversight. The proposed financial services to be launched under the regulatory sandbox should include new or emerging technology, or use of existing technology in an innovative way and should address a problem and bring benefits to consumers.

    Innovators may lose some flexibility and time in going through the sandbox process. However, running the regulatory sandbox in a time-bound manner at each stage can mitigate this risk. Post sandbox testing, a successful experimenter may still require regulatory approvals before the product or services or technology can be permitted for wider application. The target applicants for entry to the regulatory sandbox are fintech companies including startups, banks, financial institutions, and any other company partnering with or providing support to financial services businesses, subject to the sandbox criteria laid down in these guidelines. The focus of the regulatory sandbox will be to encourage innovations intended for use in the Indian market in areas where there is absence of governing regulations, where there is a need to temporarily ease regulations for enabling the proposed innovation, and where the proposed innovation shows promise of easing or effecting delivery of financial services in a significant way. 

    A detailed end-to-end sandbox process, including the testing of the products or innovations by fintech entities, shall be overseen by the FinTech Unit, also known as FTU, under overall guidance of the Inter Departmental Group of RBI, with participation of domain experts. Each cohort of the regulatory sandbox shall have the following five stages and timeline:

    • Preliminary Screening. This phase may last for four weeks from the closure of application window. The applications shall be received by the FinTech Unit and evaluated to shortlist applicants meeting the eligibility criteria. 
    • Test Design. This phase may last for four weeks. The FinTech Unit shall finalize the test design through an iterative engagement with the applicants and identify outcome metrics for evaluating evidence of benefits and risks.
    • Application Assessment. This phase may last for three weeks. The FinTech Unit shall vet the test design and propose regulatory modifications, if any.
    • Testing. This phase may last for a maximum of 12 weeks. The FinTech Unit shall generate empirical evidence to assess the tests by close monitoring.
    • Evaluation. This phase may last for four weeks. The final outcome of the testing of products or services or technology as per the expected parameters including viability or acceptability under the regulatory sandbox shall be confirmed by RBI. The FinTech Unit shall assess the outcome reports on the test and decide on whether the product or service is viable and acceptable under the regulatory sandbox.

    During the consultation period, RBI had received 381 para-wise comments from 69 stakeholders, including fintech entities, banks, multilateral agencies, industry associations, payment aggregators, audit and legal firms, government departments, and individuals, on the various aspects of the framework. The comments mainly concerned the sandbox objectives, eligibility criteria, fit and proper criteria for participants, list of exclusions, legal and regulatory waiver, consumer protection, and transparency and disclosure. RBI has also considered the suggestions appearing in 17 newspaper reports. The received suggestions were suitably incorporated into the final framework for regulatory sandbox.

     

    Keywords: Asia Pacific, India, Banking, Regulatory Sandbox, Fintech, Technology, Regtech, RBI

    Related Articles
    News

    PRA Revises Branch Return and Updates Guidance for Regulatory Reports

    PRA published the policy statement PS17/19, which contains the final policy related to changes in the format and content of the Branch Return Form and reporting guidance.

    September 12, 2019 WebPage Regulatory News
    News

    FINMA Outlines Treatment of Stablecoins in Supplement to Guide on ICO

    FINMA published a supplement to its initial coin offerings (ICOs) guidelines, outlining the treatment for stablecoins under the Swiss supervisory law.

    September 11, 2019 WebPage Regulatory News
    News

    Ursula von der Leyen Presents Structure of Next European Commission

    President-elect Ursula von der Leyen has presented her team and the new structure of the next European Commission.

    September 10, 2019 WebPage Regulatory News
    News

    FED Proposes to Revise and Extend Reporting Form on Systemic Risk

    FED proposed to extend for three years, with revision, the Banking Organization Systemic Risk Report (FR Y-15; OMB No. 7100-0352).

    September 10, 2019 WebPage Regulatory News
    News

    EBA Issues Revised List of Validation Rules for Reporting

    EBA published the revised list of validation rules (version 2.9) in its implementing technical standards on supervisory reporting.

    September 10, 2019 WebPage Regulatory News
    News

    Bundesbank Publishes Supplementary Validation Rules for Reporting

    Bundesbank published the updated document containing supplementary validation rules in the context of the implementation of the reporting system at national level.

    September 10, 2019 WebPage Regulatory News
    News

    APRA Licenses Xinja Bank as Authorized Deposit-Taking Institution

    APRA granted Xinja Bank Limited a license to operate as an authorized deposit-taking institution without restrictions, under the Banking Act 1959.

    September 09, 2019 WebPage Regulatory News
    News

    FDIC Proposes Revisions to Regulations on Interest Rate Restrictions

    FDIC proposed revisions to its regulations covering interest rate restrictions that apply to less than well-capitalized insured depository institutions.

    September 09, 2019 WebPage Regulatory News
    News

    EBA Intends to Clarify End-Treatment of Grandfathered Instruments

    EBA announced its intention to clarify the prudential treatment applicable to own funds instruments at the end of the grandfathering period, which expires on December 31, 2021.

    September 09, 2019 WebPage Regulatory News
    News

    IMF Releases Reports on 2019 Article IV Consultation with Saudi Arabia

    IMF published its staff report and selected issues report in context of the 2019 Article IV consultation with Saudi Arabia.

    September 09, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3799