The Reserve Bank of India (RBI) on October 12 announced a standard operating procedure (SOP) for interoperable regulatory sandbox to regulate newer fintech products and services falling in the ambit of more than one regulator.
What is regulatory sandbox?
- A regulatory sandbox is a framework that allows live experiments in a controlled environment under supervision.
Salient features of SOP
- The move is aimed at developing a clear jurisdiction where there are overlapping areas involving multiple regulators, including the RBI, Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority (Irdai), Pension Fund Regulatory and Development Authority (PFRDA).
- Under the framework, the dominant feature of the product will determine the influence of the regulator and the regulator under whose jurisdiction such feature will be the principal regulator and others will be associate regulators.
- The dominant feature will be determined based on the number of relaxations sought for the product and the type of the product.
- The SOP is prepared by the inter-regulatory technical group on fintech, which is chaired by chief general manager of the RBI’s fintech department and representatives of Sebi, Irdai, IFSCA, PFRDA and the central government.
