Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday floated a discussion paper on “Regulatory Sandbox” – to boost the development and adoption of fintech solutions.
Regulatory Sandbox is a live testing environment where fintech companies can deploy new products, processes, services and business models on a limited set of customers for a specified period of time with certain relaxations in Sebi regulations and guidelines.
Earlier this month, Sebi had proposed “Innovation Sandbox” – a testing environment where fintech firms can experiment innovations in a closed environment, with historical data.
The markets regulator said the current move was a step ahead in the same direction as innovation sandbox.
Under the current proposal – the regulatory sandbox—financial institutions will be granted certain facilities and flexibilities to experiment with finech solutions in live environment and on real customers, and these features will be fortified with necessary safeguards for investor protection and risk mitigation.
Sebi said it believes that encouraging adoption and usage of fintech would have a profound impact on the development of securities market, and can act as an instrument to further develop and maintain an efficient, fair and transparent securities market ecosystem.
“Innovation through investor-centric experimentation has the potential to create better financial products, lower the costs of transaction for investors and promote financial inclusion especially for Indian investors with limited means,” Sebi said in a report.
“However, there have been instances when innovation without proper regulatory oversight has caused damage to investors and economies. Therefore, it is imperative that new technology intensive business models and innovations are deployed with proper regulatory oversight and risk mitigation safeguards,” the markets regulator added.
It said the sandbox is intended to serve as a testing ground for new buRead More – Source