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- According to
RBI , the Fintechself regulatory organisation (SRO-FT) would derive its strength from its membership, ensuring that it is truly representative of thefintech sector . - The
SRO model enables a balance between regulation and innovation, which is especially critical in fast-evolving sectors such as fintech. - The SRO-FT is anticipated to function impartially, with credibility and responsibility under the supervision of the regulator.
The Reserve Bank(RBI) of India has released a preliminary framework outlining general functions, governance standards, and eligibility requirements for the establishment of a self-regulatory organisation for
The recognition of SRO-FTs would be determined the quantity and characteristics of the applications received.
According to the RBI, “The SRO-FT would derive its strength from its membership, ensuring that it is truly representative of the fintech sector. Through comprehensive membership agreements that encompass a broad spectrum of industry players, the SRO-FT should gain the legitimacy and credibility to not only frame baseline standards and rules of conduct codes, but also to effectively monitor and enforce them.”
Keeping up with technological progress
“The RBI’s move to establish an SRO framework is a game-changer in financial regulations, especially for digital lending and AI-driven innovation. This is a strong shift towards a collaborative, adaptive ecosystem. By integrating industry insights into regulation, we’re ensuring that rules are practical and keep up with technological progress, fostering innovation and growth,” says
He adds that the SRO model enables a balance between regulation and innovation, which is especially critical in fast-evolving sectors such as fintech. This is not just about ensuring compliance; it’s about creating a culture of integrity and ethical practices that are ingrained in the industry’s DNA.
The RBI’s commitment to this collaborative approach is thus a significant step in developing a resilient financial ecosystem.
Healthy and sustainable growth of the fintech sector
“The creation of an SRO is seen as crucial in combating the influence of unscrupulous lenders, promoting ethical conduct, strengthening lending infrastructure, and formulating adaptable regulatory strategies,” says
The SRO-FT is anticipated to function impartially, with credibility and responsibility under the supervision of the regulator. Its primary goal is to contribute to the healthy and sustainable growth of the fintech sector, while also charting a smooth path to phased regulatory compliance when necessary.
“This collaborative and participatory approach aligns with the RBI’s overarching objective of fostering a resilient and sustainable financial ecosystem, emphasising ethical behaviour and transparency,” says Ekambaram.
The SRO-FT is thus expected to play a pivotal role in shaping the course of digital lending in India ensuring the adoption of responsible practices and maintaining integrity within the industry.