THE self-regulatory body (SRO) would be industry-led and would be responsible for establishing and enforcing regulatory standardspromote ethical conductensuring market integrityresolve disputes and promote transparency and accountability among its members.
Fintechs should create a self-regulatory body To address their needs and challenges, Reserve Bank of India Governor Shaktikanta Das had said in September. A draft framework was released in January.
RBI requested that this OAR be built on a “representative” structure that would allow it to draw on the collective expertise and experience of its members, resulting in the development of pragmatic, adaptive and widely accepted standards within the fintech community.
The SROs were asked to motivate their members to align with regulatory priorities and facilitate communication with the regulator, i.e. the RBI.
No entity should hold more than 10% or more of its paid-up equity capital. This SRO could have fintechs domiciled outside India as members, the RBI said. The guidelines come as India’s fintech sector is growing rapidly, driven by rising demand for digital payments and lending, raising concerns over customer protection, data privacycybersecurity and internal governance. The candidate must have a minimum net worth of Rs. 2 crores within one year of recognition as a SRO-FT by the RBI, or before the commencement of such operations, he added.
Such a candidate should represent the fintech sector with members from entities “of all sizes, stages and activities”, with a board of directors and key executives possessing professional competence and a reputation for fairness and integrity, the RBI said.
The number of SRO-FTs to be recognised would depend on the number and nature of applications received, the RBI said, adding that it reserved the right not to grant recognition to any such application.
(With contributions from the agency)