India’s cenbank publishes final guidelines for fintech self-regulatory body

Author: Siddhi Nayak

MUMBAI (Reuters) – India’s central bank on Thursday published final guidelines for financial technology companies to set up a self-regulatory organization (SRO) to enforce regulatory standards and support transparency in the sector.

The guidelines come at a time when India’s fintech industry is growing at a breakneck pace due to rising demand for digital payments and loans, raising concerns around customer protection, data privacy, cybersecurity and internal governance.

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 SRO for FinTechs (SRO-FT), an industry-led entity, “should gain legitimacy and credibility to not only set baseline standards and codes of conduct, but also effectively monitor and enforce them,” the RBI said in a release. .

Industry bodies are expected to provide sector-specific insights, address regulatory issues and cooperate for the overall development of the sector, the RBI said, adding that fintechs are “encouraged” to participate in at least one such body.

The entity’s shareholding should be sufficiently diversified and no single entity should hold 10% or more of the paid-up share capital, either alone or in concert, the central bank said.

The applicant should have a net worth of at least Rs 20 million ($240,009) within one year of being recognized by the RBI as an SRO-FT or before commencement of such activities, it added.

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.

He added that SRO-FT members can include fintechs based outside India.

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.

($1 = 83.3300 Indian rupees)

(Reporting by Siddhi Nayak; Editing by Nivedita Bhattacharjee)