The Reserve Bank of India (RBI) will set up a dedicated ‘on Tap’ cohort on climate change risks and sustainable finance under its regulatory sandbox initiative.
- The Reserve Bank has been encouraging and facilitating innovations through its Regulatory Sandbox and Hackathon initiatives in the fintech space.
- What is a Regulatory Sandbox?
A Regulatory Sandbox is a controlled environment where financial service providers and fintech innovators can test new products, services, and business models with relaxed regulations for a limited period. - Purpose of the Sandbox:
- Facilitates innovation while ensuring regulatory oversight.
- Helps regulators and businesses assess risks and benefits before full-scale deployment.
- Protects consumers while promoting responsible financial advancements.
- In India, financial regulators such as the Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority and the International Financial Services Centres Authority run their own sandboxes.
Thematic Cohorts and the ‘On Tap’ Cohort
- The RBI introduced the Regulatory Sandbox in 2019 with a thematic cohort approach, where each batch of participants focuses on specific areas of financial innovation.
- Past cohorts have included themes like retail payments, cross-border payments, and MSME lending.
- The newly announced ‘on Tap’ cohort focuses on climate change risks and sustainable finance, highlighting RBI’s commitment to green finance initiatives.
(Source: Business Standard)
