India cenbank releases final guidelines for fintech self-regulatory body
By Siddhi Nayak
MUMBAI (Reuters) – India’s central bank on Thursday released its final guidelines for financial technology firms to create a self-regulatory organisation (SRO) that is aimed at enforcing regulatory standards and fostering transparency in the sector.
The guidelines come at a time when the fintech industry in India is growing at a break-neck pace due to surging demand for digital payments and borrowings, raising concerns relating to customer protection, data privacy, cyber security and internal governance.
Fintechs should create a self-regulatory body to address their needs and challenges, the Reserve Bank of India Governor Shaktikanta Das had said in September. A draft framework was released in January.
An SRO for fintechs (SRO-FT), an industry-led entity, “should gain the legitimacy and credibility to not only frame baseline standards and rules of conduct codes, but also effectively monitor and enforce them,” the RBI said in a release.
The industry bodies would be expected to relay sector-specific insights, address regulatory concerns and collaboratively work towards the overall development of the sector, the RBI said, adding that fintechs are “encouraged” to participate in at least one such body.
Shareholding of the entity should be sufficiently diversified, and no entity should hold 10% or more of its paid-up share capital, either singly or acting in concert, the central bank said.
The applicant should have a minimum net worth of 20 million rupees ($240,009) within a period of one year after recognition as an SRO-FT by RBI, or before commencement of such operations, it added.
Such an applicant should represent the fintech sector with membership across entities “of all size, stage and activities,” with the board and key managers possessing professional competence and a reputation for fairness and integrity, RBI said.
SRO-FTs could have fintechs domiciled outside India as members, it added.
The number of SRO-FTs to be recognised would depend on the number and nature of the applicants received, the RBI said, adding that it reserves the right to not grant recognition to any such application.
($1 = 83.3300 Indian rupees)
(Reporting by Siddhi Nayak; Editing by Nivedita Bhattacharjee)
