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Context

• The Reserve Bank of India (RBI) has issued a framework aimed at enhancing self-governance and compliance within the FinTech sector.
• The RBI envisages the SROs to promote a healthy balance between innovation and regulatory compliance in a manner that protects consumer interests.

Application Process

• Entities meeting or intending to meet the eligibility conditions outlined in the SRO-FT framework are required to submit applications.
• The RBI will review the applications and publish the names of eligible applicants for "recognition" on its website.

Objectives of SRO-FT

• Objective Operation: The SRO-FT is expected to operate objectively, with credibility and responsibility under the oversight of the RBI.
• Promoting Sector Development: It should strive towards promoting healthy and sustainable development within the FinTech sector.
• Regulatory Compliance: The SRO-FT may identify a glide path towards phased regulatory and/or supervisory compliance if deemed necessary.

Eligibility Criteria for Applicants

• Not-for-Profit Entity: The applicant should be set up as a not-for-profit company, ensuring its primary focus is on sector development rather than profit.
• Diversified Shareholding: Shareholding should be sufficiently diversified, with no single entity holding 10% or more of the paid-up share capital

Conclusion

• The issuance of the SRO-FT framework by the RBI signifies a proactive approach towards enhancing governance and compliance within the FinTech sector.
• By encouraging self-regulation through a structured framework, the RBI aims to foster a conducive environment for the sustainable growth of FinTech firms while ensuring regulatory oversight and compliance.

SOURCE: Business-Standard

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