The Reserve Bank of India (RBI) has finalized the Framework for Recognizing Self-Regulatory Organizations for the fintech sector (SRO-FT framework). The SRO-FT will strive towards healthy and sustainable development of the fintech sector and, if necessary, identify a glide path to a phased regulatory and / or supervisory compliance, RBI said in a release.
A draft framework for recognising SRO for the fintech sector was released on January 15, 2024, to encourage self regulation in the sector. The framework has now been refined based on the feedback from various stakeholders.
Functions and Responsibilities
The SRO-FT will guide the conduct of its members, ensure that they adhere to industry standards, comply with relevant laws and regulations, and maintain high ethical standards. This involves establishing and enforcing guidelines for consumer protection, data security, data privacy, etc.
It will play a crucial role in promoting responsible innovation by providing a framework that encourages responsible experimentation and will be responsible for addressing any grievance, conflict of interest, or dispute that may arise among its members, and foster a fair, equitable and competitive environment.
“Through these responsibilities, the SRO-FT should act as a steward of trust and stability in the fintech sector, balancing the need for innovation and maintaining integrity,” RBI said.
Responsibilities towards RBI
The SRO-FT is expected to play a pivotal role in ensuring compliance with statutory and regulatory frameworks, adhering to industry standards and best practices, and in facilitating transparent communication channels with RBI. As per the release, its responsibilities towards RBI should broadly encompass relaying sector-specific insights, addressing regulatory concerns, and collaboratively working towards the overall development of the fintech sector.
The SRO-FT is expected to serve as a valuable bridge, foster cooperation, and provide policy commensurate with the dynamic nature of the fintech sector.