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Last Updated : Apr 26, 2019 01:04 PM IST | Source: Moneycontrol.com

Fintechs welcome RBI’s regulatory sandbox; Anticipate greater innovation

The framework is expected to open up opportunities for fintech startups to experiment.

Moneycontrol Contributor @moneycontrolcom

The central bank, on the April 18, came up with a proposal to start a regulatory sandbox for fintechs. The draft, titled “Enabling Framework for Regulatory Sandbox” is expected to allow fintech firms to test their products and services freely in the market without the interference of many regulatory norms.

“The RS allows the regulator, the innovators, the financial service providers (as potential deployers of the technology) and the customers (as final users) to conduct field tests to collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and containing their risks,” the draft quotes.

RBI’s move, by now, has been welcomed by many start-ups in the industry and many are hopeful of taking full advantage of it.

“This is an excellent initiative by RBI. We don’t know of any large economies in the world with a regulator as progressive as this. The notion of relaxing the rules with the clear parameters that were provided will allow for rapid experimentation,” says Bala Parthasarathy, CEO & co-founder, MoneyTap, a Bengalure-baed Fintech. He believes that fintech will be able to benefit from the move, provided ‘the approvals for being in the Sandbox come quickly and there are no hidden rules beyond what is stated on the website’.

Some fintechs are also waiting to see how the new Regulatory Sandbox develops over time and how it will open up opportunities for greater and newer innovations in the financial sector.

“The sandbox will give the fintech startups the ability to experiment with their idea in a controlled environment even where the regulatory provisions around the proposed concept are still evolving. This will give fintechs more leeway in assessing the utility and real use cases of their ideas without having to cross the regulatory hurdles first,” says Gaurav Gupta, Co-founder and CEO, Myloancare.in.

He also added, “It is a great initiative by the RBI and one hopes that it will evolve over a period of time. It remains to be seen how the new system develops.”

Speaking about experimentation and scope for bigger innovation for fintech firms, Parthasarathy of MoneyTap adds, “Rapid experimentation is the lifeblood of innovation and this should open up the floodgates for innovation and trying out new products and risk models.”

“RS opens up the possibility for greater innovation. Successful proof of concept will help by way of more chances of attracting funding and also a higher likelihood of favourable regulatory evolution,” hopes Gupta of Myloancare.in.

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First Published on Apr 26, 2019 01:04 pm
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