Key Points
Mumbai: The Reserve Bank of India has come out with a draft framework that lays down broad functions, governance standards, and eligibility criteria for setting up a self-regulatory organization for fintech companies (SRO-FT)..
Given the diverse nature of fintechs, restricting to one SRO-FT could dilute some industry concerns, while having multiple SRO-FTs could undermine the representative character of self-regulation..
What is important is the RBI is recognizing how fintechs are playing a role and at the same time the regulator understands that they cannot regulate everybody, so SROs can play an important role by trying to bring the large community under some sort of regulations, without hampering innovations, which is important for growth of a relatively new sector like digital lending," said Anuj Kacker, executive committee member of Digital Lenders Association of India..
On eligibility and membership, the draft norms said the applicant should be set up as a not-for-profit firm and should have sufficient net worth and demonstrate the capability of establishing the necessary infrastructure to fulfil the responsibilities of SRO-FT..
The RBI has also raised a few issues like what incentives an SRO-FT will create for membership, whether the SROs should consist only of members that are unregulated, or in combination with those that are regulated (even for a part of their activities)..
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