The proposed 'regulatory sandbox' is intended to serve as a testing ground for new business models and technologies that benefit investors, Indian markets and the economy at large
The stock market regulator, Securities & Exchange Board of India (SEBI) has decided to allow live testing of new fintech products, services and business models by companies on select customers.
Initially, all SEBI-registered entities will be eligible to participate in such a 'regulatory sandbox’—a live testing environment where new products processes, services and business models—can be deployed on a limited set of eligible customers for a specified period of time with certain relaxations in rules and guidelines, said SEBI.
SEBI decided it in a board meeting today. Interestingly, SEBI has allowed regulated entities to test solutions even in activities for which they are not registered. This cross domain approach will provide a lot of flexibility to players and can usher in better innovation.
A limited registration will be granted for such testing, the regulator said.
Later, SEBI said, fintech startups and other entities that are not regulated by it may also be allowed. But there will be no exemptions from the existing investor protection framework, KYC and anti-money laundering rules.
The proposed 'regulatory sandbox' is intended to serve as a testing ground for new business models and technologies that benefit investors, Indian markets and the economy at large. Increasingly, regulators across sectors and across geographies are taking this approach to test new technologies and allow innovation in their sectors.
In India, the banking regulator, Reserve Bank of India (RBI) has also taken this approach in digital payments. In many countries, regulators are actively looking to test blockchain with such an approach.