RBI’s framework release today suggests Fintech SRO to be development oriented, true representative

Reserve Bank of India

Self-Regulatory Organisations (SROs) for fintech sector should be development oriented, true representative and legitimate arbiter of disputes, the Reserve Bank of India (RBI) said on May 30 in its framework release.

SROs for fintech sector should also be independent from influence, encouraging members to subscribe to regulatory expectations, and repository of information, it added.

The central bank released 'Framework for Recognising Self-Regulatory Organisation(s) for FinTech Sector' (SRO-FT framework).

On January 15, the RBI had released draft norms on this and invited comments and feedback from stakeholders.

On the Independence from Influence front, the central bank said to maintain credibility, the SRO-FT should operate independently, free from the influence of any single member or group of members. This would ensure refined decision-making and prevent the organisation from being swayed by the interests of a dominant few.

Members should perceive the SRO-FT as a legitimate arbiter of disputes. This would require a transparent and fair resolution mechanism for disputes arising among members that instil confidence in the FinTech

sector, RBI said.

The SRO-FT should be capable of motivating its members to align with regulatory priorities. This should involve facilitating communication between industry players and RBI, advocating for necessary changes, and promoting a culture of compliance, RBI said.

On September 6, 2023, RBI Governor Shaktikanta Das urged fintechs to establish self-regulatory organisations (SRO) over the next year.

"I would like to use this opportunity to urge and encourage the FinTechs to establish a Self-Regulatory Organization themselves," Das said in a speech, at Global Fintech Fest (GFF) 2023.

After this, on October 19, 2023, RBI executive director Ajay Kumar Choudhary said the central bank doesn't want to go for fintech regulations immediately but a self-regulatory organisation (SRO) is likely to come up within this year.

“Everything has to be done in a phased manner. We don’t want to go for Fintech regulations immediately but what the Governor announced is SRO mechanism that is likely to come within this year,” Choudhary said on the sidelines of 18 Annual Summit & Awards, Banking & Financial Sector Lending Companies.