The framework acknowledges the rapid innovation and growth within the fintech landscape and the need for a balanced regulatory approach
To encourage self-regulation in the fintech sector, the Reserve Bank of India (RBI) has finalized a framework for self-regulatory organizations (SROs) in the sector, incorporating feedback from stakeholders on the draft norms released on January 15, 2024.
The framework acknowledges the rapid innovation and growth within the fintech landscape and the need for a balanced regulatory approach that fosters development as well as consumer protection. By introducing SROs, the RBI aims to promote a culture of self-governance among fintech entities, ensuring that they adhere to high standards of conduct, transparency, and accountability. “We applaud the RBI’s initiative to create a structured, self-regulatory framework for the fintech sector. This move will not only enhance the credibility and sustainability of our industry, but also ensure that customer protection, data privacy, and cybersecurity are given top priority,” said Harshvardhan Lunia, chair of the Fintech Convergence Council (FCC), and founder, CEO, Lendingkart.
Upholding integrity, fairness, and responsiveness, and complying with all relevant laws and regulations, is paramount for the fintech industry. “We are dedicated to embedding these principles in our operations and contributing to the development of a robust and trustworthy fintech ecosystem. CASHe is excited about the potential of this framework and eagerly anticipates the enhanced standards and practices within the fintech sector, which will ultimately foster a safer and more reliable financial environment for all stakeholders,” said Yashoraj Tyagi, CEO, CASHe.
The SROs will have the critical responsibility of establishing guidelines and standard operating procedures that foster a culture of ethical conduct and innovation. “We welcome the RBI’s initiative to establish Self-Regulatory Organisations (SROs) for the fintch sector. This forward-thinking approach will play a crucial role in setting industry standards for operations, ethics, and business practices, ensuring that all fintech entities operate within a framework of integrity and responsibility. This is particularly significant for small and early-stage startups, which will benefit from clear guidance and a structured pathway towards sustainable growth and ethical operations,” said Sundeep Mohindru, promoter & director, M1xchange.
It’s worth noting that the RBI recognizes the integral role played by fintechs within the country’s broader economic ecosystem and acknowledges that not all players can be directly regulated by authorities. Raja Debnath, MD, Veefin Solutions Limited, said, “SROs will serve as an invaluable resource in this context, regulating the community without hindering innovation. Moreover, by acting as a bridge between the fintech sector and the RBI, the SRO will assist the stakeholders with sector-specific insights and better address regulatory concerns, fostering cooperation and the overall development of the sector.”
Sharing a similar opinion, Anand Kumar Bajaj, founder, MD & CEO, PayNearby, said, “By fostering a development-oriented approach and inclusive governance, the SRO initiative aligns perfectly with our mission to democratise financial & digital services and empower local retailers across Bharat.”
Startups are confident that these industry-led SROs will create a more robust and trustworthy fintech ecosystem, benefiting all stakeholders.