Chennai: The Reserve Bank of India has proposed that fintech start-ups could set up regulatory sandbox or live-testing of innovative products and services in segments such as retail payments, money transfer, artificial intelligence and data analytics in the financial sector.
A regulatory sandbox (RS) usually refers to live-testing of new products or services in a controlled and test regulatory environment for which regulators may or may not permit certain regulatory relaxations for the limited purpose of the testing.
A working group set up by the RBI had recommended introduction of an appropriate framework for an RS within a well-defined space and duration where the financial sector regulator will provide the requisite regulatory guidance to increase efficiency, manage risks and create new opportunities for consumers.
In line with the recommendation, the central bank has released draft ‘Enabling Framework for Regulatory Sandbox’.
“The proposed financial service to be launched under the RS should include new or emerging technology, or use of existing technology in an innovative way and should address a problem, or bring benefits to consumers,” the draft said.