{"id":259548,"date":"2023-09-11T21:01:05","date_gmt":"2023-09-11T15:31:05","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=259548"},"modified":"2023-09-11T21:01:05","modified_gmt":"2023-09-11T15:31:05","slug":"developing-best-practices-sro-for-fintechs-will-be-a-first-step","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/developing-best-practices-sro-for-fintechs-will-be-a-first-step\/","title":{"rendered":"Developing best practices \u2013 SRO for fintechs will be a first step"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201cDeveloping best practices \u2013 SRO for\u00a0fintechs\u00a0will be a first step<\/strong>\u201d published in<\/strong> Business Standard <\/strong>on\u00a011th<\/sup> September 2023<\/strong>.<\/p>\n

Syllabus: GS 3 \u2013 Indian Economy \u2013 Banking Sector<\/strong><\/p>\n

Relevance: <\/strong>About regulating fintech<\/strong><\/p>\n

News: <\/strong>The RBI has suggested fintech to establish a self-regulatory organization (SRO<\/strong>), which is a step in the right direction.<\/p>\n

What are fintech?<\/strong><\/h2>\n

Fintech plays a vital role in offering convenient access to formal financial services, benefiting lower-income individuals.<\/p>\n

The fintech sector encompasses various digital-based financial services such as payments, UPI-based transfers, digital wallets, and small, short-term loans, effectively replacing traditional moneylenders.<\/p>\n

Fintech assesses borrowers’ creditworthiness using transaction data and collaborates with traditional financial institutions like NBFCS and banks.<\/p>\n

They have maintained reasonable default rates while generating significant revenue by serving the low-income segment.<\/p>\n

However, to maintain ethical and regulatory standards, fintech practices and processes need to align with established norms.<\/p>\n

Why is it necessary to regulate fintech?<\/strong><\/h2>\n

Fintech can charge excessively high interest rates, especially to borrowers with limited access to formal credit, which<\/strong> could lead to defaults. Mis-selling of loans is another concern due to incentive structures.<\/p>\n

Therefore, looking at potential concerns, the RBI has established a basic framework for a self-regulatory organization (SRO) and encouraged fintech to regulate themselves. However, if necessary, stricter regulations can be imposed later.\u00a0<\/strong><\/p>\n

Currently, an SRO offers the innovative fintech industry an opportunity to shape its own best practices.<\/strong><\/p>\n

Read More: <\/strong>Regulation of Fintech in India – Explained<\/strong><\/a> and <\/strong>Why the RBI has proposed setting-up a Self Regulatory Organisation for fintech<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cDeveloping best practices \u2013 SRO for\u00a0fintechs\u00a0will be a first step\u201d published in Business Standard on\u00a011th September 2023. Syllabus: GS 3 \u2013 Indian Economy \u2013 Banking Sector Relevance: About regulating fintech News: The RBI has suggested fintech to establish a self-regulatory organization (SRO), which is a step in the… Continue reading Developing best practices \u2013 SRO for fintechs will be a first step<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216,8184],"class_list":["post-259548","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","tag-indian-economy","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/259548","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=259548"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/259548\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=259548"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=259548"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=259548"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}