RBI Releases Guidelines for Fintech SRO Establishment

The Reserve Bank of India (RBI) has taken a significant step by releasing final guidelines for the establishment of a self-regulatory organization (SRO) to supervise the fintech sector in India. This move aims to ensure that fintech companies adhere to regulatory standards and promote transparency in their operations within the country.

The SRO for fintechs (SRO-FT) is envisioned as an industry-led entity focused on development, serving as a genuine representative and impartial mediator in the sector. It is tasked with setting and enforcing basic standards and codes of conduct to maintain credibility. RBI Governor Shaktikanta Das had urged the formation of such a body last September to address the unique requirements and challenges faced by fintech firms.

Under the guidelines, the SRO-FT will operate under RBI supervision, emphasizing the importance of responsible and objective functioning. The membership of the SRO-FT is mandated to reflect the diversity of the fintech sector, including entities regulated by the RBI. To ensure independence, no single entity can hold more than 10% of the SRO's paid-up capital.

This initiative is designed to empower the fintech industry to exhibit responsible behavior and foster innovation through self-governance mechanisms within a suitable regulatory framework overseen by the central bank.

The establishment of the SRO-FT marks a significant milestone in the regulation of the fintech sector in India. By promoting transparency, setting standards, and encouraging responsible behavior, this self-regulatory body aims to facilitate the sustainable growth of fintech companies while fostering innovation. The guidelines set forth by the RBI provide a clear roadmap for the functioning of the SRO-FT, ensuring that it operates independently and effectively to benefit the entire fintech ecosystem.