RBI Releases Draft Framework For Fintech Self-Regulatory Organization
RBI Releases Draft Framework For Fintech Self-Regulatory Organization
Invites feedback by February-end, after which a final outline would be issued
In a draft framework released recently, the Reserve Bank of India (RBI) has stated that Indian financial technology (fintech) firms should create a self-regulatory organization (SRO) that will ensure statutory and regulatory compliance.
The central bank said that the body would strengthen governance standards and address the sector's needs and challenges.
The draft framework has been introduced, as the fintech industry is growing at a break-neck speed due to surging demand for digital payments and borrowings. In September, the RBI Governor Shaktikanta Das had urged fintech firms to create such a body.
The banking regulator stated, "Achieving a healthy balance between facilitating innovation by the industry on the one hand and meeting regulatory priorities in a manner that protects consumers and contains risk, on the other, is crucial to optimizing the contribution of the fintech sector.”
It added that self-regulation within the fintech sector was a preferred approach for achieving the desired balance.
As per the draft norms, the SRO would ensure adherence to industry standards and facilitate a transparent communication channel with the RBI. It is expected to consult the RBI in developing and updating the taxonomy for fintech firms to carry out any tasks and supply information.
The SRO board should put in place a framework for the ongoing monitoring of the 'fit and proper' status of its directors. The RBI would have the authority to inspect or arrange to have the books of the SRO audited.
