RBI allows six entities to test Fintech products to tackle financial fraud
Opinions expressed by Contractor the contributors are their own.
You are reading Entrepreneur India, an international franchise of Entrepreneur Media.
As part of the fourth cohort under the RBI’s regulatory sandbox scheme, six entities that include HSBC and Creditwatch have been allowed to test their fintech products to prevent and reduce financial fraud, according to a PTI report. The Reserve Bank reportedly announced the opening of the fourth cohort under the regulatory sandbox in June 2022 for the prevention and combating of financial fraud.
RBI Twitter handle
To enable regulated and orderly growth of the fintech ecosystem in India, the Reserve Bank in August 2019 became one of the few countries to have its very own regulatory sandbox ecosystem. Within the sandbox, the qualified entities can live test their innovative products or services in a controlled environment. This is a collaboration between the regulator, innovators, financial service providers and end users that will ensure that Indian consumers continue to receive best in class financial services.
The RBI said it had received nine applications under the fourth cohort, of which six units have been selected for the “test phase”. The selected six entities are – Bahwan Cybertek, Crediwatch Information Analytics, enStage Software (Wibmo), HSBC in partnership with Wibmo, napID Cybersec and Trusting Social. The selected devices will begin testing their products in February, according to the report.
According to the RBI, cited in the report, the first and foremost benefit of the regulatory sandbox is that it promotes ‘learning by doing’ on all sides. Among other benefits, the regulatory sandbox can lead to better results for consumers through an increased choice of products and services, reduced costs and improved access to financial services.
As per earlier reports, the enabling framework for the Regulatory Sandbox (RS) was placed on the RBI website on 13 August 2019. This was followed by the announcement of ‘Retail Payments’ as the theme for the first cohort. The Enabling Framework was further updated on 16 December 2020, incorporating the learning during the implementation of the first cohort. Furthermore, the second cohort with the theme “Cross-border payments” was also opened for applications. It was also communicated that the theme for the third batch will be “MSME Lending”.
The target applicants for entry into the regulatory sandbox are fintech companies, including startups, banks, financial institutions, any other company and Limited Liability Partnerships (LLPs) and partnership firms, which work with or provide support to financial services, the report noted.
