RBI for Setting up Regulatory Sandbox
The Reserve Bank of India (RBI) will be issuing guidelines within two months for the fintech companies to test their new products on a small group of users before scaling up. This regulatory sandbox will help fintech companies to launch innovative products at a lower cost and in less time and enable fintech companies to conduct live or virtual testing of their new products and services.
A Sandbox is a framework set up by a regulator that allows FinTech start-ups to conduct live experiments in a controlled environment under supervision.
Benefits from Regulatory sandbox
- Regulatory sandbox will provide a well-defined space for the companies to develop new products.
- Regulatory sandbox allows for experimenting with their products and fintech solutions. In case of failure, the consequences would be contained and the reasons will be analysed for betterment.
- Regulatory Sandbox’ would benefit FinTech companies by way of reduced time to launch innovative products at a lower cost.
The RBI’s working group on FinTech and digital banking in 2017 had recommended that a regulatory sandbox/innovation hub be introduced within a well-defined space and duration to experiment with FinTech solutions, where the consequences of failure can be contained and reasons for failure analysed.
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