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- The Reserve Bank of India(RBI) has issued the final framework for regulatory sandbox in order to enable innovations in the financial technology space.
- Regulatory sandbox(RS) is an infrastructure that helps financial technology (FinTech) players live test their products or solutions before getting the necessary regulatory approvals for a mass launch which saves start-up time and cost.
- The target applicants for entry to the RS 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 requirements that should mandatorily be complied by the regulatory applicants are (a)customer privacy and data protection, (b)secure storage of and access to payment data of stakeholders, (c)security of transactions (d)KYC requirements and (e)statutory restrictions.
- RBI said that the entity should have a minimum net worth of Rs 25 lakh as per its latest audited balance sheet.The promoters/ directors of the entity should be fit and proper and the conduct of the bank accounts of the entity as well its promoters/directors should be satisfactory.
- However,the regulatory relaxation which may be granted by the RBI are (a)liquidity requirements (b)board composition (c)management experience (d)financial soundness and (e)track record.
- Further,the negative list of products,services and technology which may not be accepted for testing are (a)credit registry (b)credit information, (c)crypto currency (d)trading or investing in crypto asset among others.
