SEBI, IRDAI Set Up Regulatory Sandbox For Fintech Innovations

After the Reserve Bank of India released a draft framework for setting up a regulatory sandbox (RS) for fintech players in the counter, the market and insurance regulators have also launched similar initiatives.

RS is an infrastructure that helps fintech players live test their products or solutions, before getting the necessary regulatory approvals for a mass launch. It saves start-ups time and cost.

Fintech in India is at the cusp of a revolution and regulators are aware of the fact. The market regulator SEBI and insurance regulator IRDAI have announced initiatives to encourage tech start-ups, especially fintech, by making data and systems available to them through the RS.

In a circular on May 20, SEBI released its RS framework, to create an ecosystem that promotes innovation in the securities market.

“SEBI is proposing an ‘Innovation Sandbox’, which would be a testing environment, where fintech firms and entities not regulated by SEBI, including individuals, could test their proposed solutions offline, isolated from the live market, subject to fulfilment of the eligibility criteria, based on market-related data made available by stock exchanges, depositories and qualified registrar and share transfer agents (QRTAs),” the circular noted.

IRDAI in February this year recommended setting up a regulatory sandbox to test new digital and tech-based innovations, before launching them in the market.

For the IRDAI sandbox, an applicant should have a net worth of Rs 10 lakh and a proven financial record of at least one year.