RBI drafts fintech framework, empowering self-regulation for the sector.

The Reserve Bank of India (RBI) has released a draft framework for self-regulatory organizations (SROs) in the fintech sector. The RBI recognizes that the fintech sector is transforming the financial services landscape and aims to strike a balance between fostering innovation and managing regulatory priorities. The draft framework outlines the characteristics of a fintech SRO, including functions, governance standards, and other relevant aspects. Stakeholders and the public are invited to provide comments and feedback until the end of February 2024. The RBI sees advantages in self-regulation, such as the ability to establish industry standards and best practices, adaptability to technological advancements, and alignment with growth and behavioral norms. While formal recognition is not required, formal acknowledgment from regulators could enhance the legitimacy of an SRO-FT and provide regulatory assurance. The final framework will take into consideration the responses received before its formulation.