Framework Issued by the RBI for Fintech Self-Regulation
A draft framework has been issued by the Reserve Bank of India (RBI) for self-regulatory organisations focusing on the fintech sector (SRO-FT).
The larger fintech industry has struggled to form a self-regulatory organisation (SRO). Discussions on the need for self-regulation began in early 2023 but materialised formally on October 6, when the RBI announced it during a press briefing.
The RBI emphasises that the SRO-FT (Self-Regulatory Organisation for Fintech) aims to empower the sector to innovate responsibly in the absence of formal regulations. It should foster responsible innovation, balancing experimentation and regulations. The SRO-FT will address grievances, conflicts, or disputes among its members. RBI’s second attempt to establish an SRO for fintech. Multiple SROs are provided, as well as a regulatory compliance culture. A fintech startup must be ‘development-centric’ and a ‘non-profit’ organisation with technological capabilities. Independent board members are required, but their net worth isn’t specified. This directive creates a significant opportunity and responsibility for the fintech ecosystem to contribute to the sustainable growth of the sector, according to Navin Surya, an investor in the fintech space.