5th June 2024- On Thursday, the Reserve Bank of India (RBI) unveiled the final guidelines for establishing a self-regulatory organisation (SRO) for the fintech sector. Following the release of draft guidelines in January and subsequent industry feedback, the RBI aims for the SRO to represent a wide range of participants, including peer-to-peer lending services and account aggregators, excluding banks.
According to the new framework, any representative organisation within the fintech sector can apply for recognition as an SRO. The applicants should encompass membership across entities of various sizes, stages, and activities. The RBI has also indicated the possibility of multiple SROs, encouraging fintech firms to participate in at least one.
An SRO serves as a non-governmental organisation that bridges the gap between industry players and the regulator while setting standards for the conduct of entities within the country. The final guidelines come nearly five months after the draft norms were released, marking a significant step towards organised regulation in the rapidly growing fintech sector.
Mr Nirav Choksi The CEO and Co-Founder of CredAble has shared his views:
“From developing purpose-built solutions to carving out profitable niches and exploring foreign markets — FinTechs in India are entering a new era of value creation. This high level of innovation has raised the stakes, necessitating industry-centric regulation. The RBI’s framework for Self-Regulatory Organizations (SROs) is a step in the right direction to enhance the credibility of the FinTech sector under the oversight of the RBI. The self-regulatory model has multiple benefits to offer. Apart from ushering in self-discipline and fostering a culture of self-governance, representative organizations for FinTechs can take on the role of SROs and create an environment conducive to aiding the organized and sustainable development of the FinTech sector. The SRO framework is designed to ensure that FinTechs adhere to high standards of transparency and accountability. FinTech companies need to view such regulatory compliances as a strategic enabler of innovation and embed compliance considerations into every stage of the innovation lifecycle.”
