Regulating Boundaries: Investigating How RBI’s Policies Shape the Fintech Landscape

A proposed framework for a self-regulatory organization for financial technology businesses (SRO-FT) has been released by the Reserve Bank of India. The framework details the organization’s intended roles, governance requirements, and qualifying criteria.According to the Reserve Bank of India (RBI), it will solicit SRO applications from fintech companies on an as-needed basis, whether for the entire industry or for particular sub-sectors. The quantity and type of applications received would determine the number of SRO-FTs to be acknowledged.

Additionally, it stated that the SRO is responsible for establishing industry standards, overseeing and enforcing regulations, resolving grievances and disputes, and reporting to the RBI.The draft standards state that in order to be eligible for membership and to fulfill the duties of SRO-FT, the applicant must be a not-for-profit business with a significant net worth and the ability to develop the infrastructure required to do so.

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In addition to completing all duties and providing information as requested, the company is anticipated to collaborate with the RBI in creating and revising the “taxonomy” for fintechs.According to the RBI rules, a minimum of one-third of the board members, including the chairperson, must be completely impartial and not have any financial ties to any fintech company.

certain questions that the RBI has brought up include the nature of the membership incentives offered by an SRO-FT and the question of whether SROs should include only unregulated members or also certain regulated members, even if only for some of their activities.The SRO’s membership should include fintech companies of all sizes, stages, and activities in order to accurately reflect the industry as a whole. If the applicant’s representation is lacking when they apply, they should outline a plan to improve it within a reasonable amount of time.

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