RBI finalises regulatory sandbox framework for innovation in fintech firms

The Reserve Bank of India (RBI) has released the final ‘enabling framework for the regulatory sandbox.
What is Regulatory Sandbox: Regulatory Sandbox (RS) usually refers to live-testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing. The RS allows the regulator, the innovators, the financial service providers (as potential deployers of the technology) and the customers (as final users) to conduct field tests to collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and containing their risks.
FinTech stands for Financial Technologies,is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services.
Purpose of RS: The objective of the RS is to foster responsible innovation in financial services, promote efficiency and bring benefit to consumers.
Fit and Proper Criteria for Selection of Participants in RS
- It should either be a company incorporated and registered in India or banks licensed to operate in India. Further, financial institutions constituted under a statute in India would also be eligible.
- The entity shall have a minimum net worth of Rs. 25 lakh as per its latest audited balance sheet.

Points to remember: