RBI Fintech SRO: RBI publishes final framework for the self-regulatory body of the Indian fintech sector

The Reserve Bank of India has finalized the SRO recognition framework for the fintech sector after receiving stakeholder feedback on the January 15 draft norms.

The Self-Regulatory Organization (SRO) will be industry-led and responsible for setting and enforcing regulatory standards, promoting ethical conduct, ensuring market integrity, resolving disputes, and supporting 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 said in September. The draft framework was published in January.

The RBI has asked this SRO to be built on a “representative” structure that would enable it to benefit from the collective knowledge and experience of its members, leading to the development of standards that are pragmatic, adaptive and widely accepted in the fintech community.

SROs have been asked to motivate their members to align with regulatory priorities and facilitate communication with the regulatory body, i.e., the RBI.

No entity should hold up to 10 percent or more of the paid-up share capital. The RBI has said that fintechs based outside India can be members of this SRO. The guidelines come as India’s fintech industry is growing rapidly, driven by growing demand for digital payments and lending, raising concerns about customer protection, data privacy, cybersecurity and internal governance. He added that the applicant should have a net worth of at least Rs 2 crore during one year from its recognition as SRO-FT by the RBI or before commencement of such activities.

Such a candidate should represent the fintech sector through membership of entities “of all sizes, stages and activities”, and the board and key managers should have professional competence and a reputation for honesty and integrity, the RBI said.

The number of SRO-FTs recognized will depend on the number and nature of applicants received, the RBI said, adding that it reserves the right not to recognize any such application.

(With agency participation)