He emphasised the need for these SROs to take proactive measures in addressing critical concerns such as market integrity, conduct, data privacy, cybersecurity, and risk management.
Sankar further added that a self-regulatory approach will help foster a sustainable and reputable fintech ecosystem
Interestingly, in July, Sankar mentioned that the central bank is working on more regulations that will be ‘developmental’ for fintech startups
RBI Deputy Governor T. Rabi Sankar has called for the creation of self-regulatory organisations (SROs) in the fintech sector. Speaking at the Global Fintech Fest 2023, Sankar stressed the need for SROs to proactively tackle key issues like market integrity, data privacy, and cybersecurity.
He pointed out that as regulatory frameworks evolve, these SROs could be instrumental in maintaining ethical practices and promoting responsible growth in fintech.
He added that a self-regulatory approach will help foster a sustainable and reputable fintech ecosystem by promoting growth while mitigating potential risks and adverse consequences.
“SROs have the potential to play a pivotal role in the fintech industry by promoting responsible practices and upholding ethical standards,” said Sankar. He believes that due to their deep understanding of the industry, fintech companies are uniquely qualified to develop and enforce rules that effectively govern the sector.
He also noted that the current regulation models may not be fully applicable to fintech companies since they are not strictly financial entities.
“Regulators and fintech firms are learning to evolve this arrangement where regulators need to know what needs to be regulated and fintech firms need to know the products it develops. The best solution for that to begin with is self-regulation,” he said.
Interestingly, in July, Sankar mentioned that the central bank is working on more regulations that will be ‘developmental’ for fintech startups. “We are working on regulations (that) would be specific to fintech entities and the fintech ecosystem,” T Rabi Sankar said at an event in Bengaluru.
Sankar’s remarks come at a time when the RBI has been actively enhancing its regulatory oversight of the fintech industry. Some of the recent initiatives include the issuance of digital lending guidelines, providing directions on the use of UPI by issuers of prepaid payment instruments (PPIs), and the release of default loss guidelines (DLG).
