What is the IoRS (Interoperable Regulatory Sandbox) for which RBI recently released an SOP? What needs to be done to get the most out of this initiative?
RBI has released a standard operating procedure (SOP) for an Inter-operable Regulatory Sandbox (IoRS) to regulate newer FinTech products and services falling in the ambit of more than one regulator. It is prepared by the Inter-Regulatory Technical Group on FinTech under the Financial Stability and Development Council.
Interoperable Regulatory Sandbox:
- A regulatory sandbox is a framework set up by a regulator that allows FinTech startups and other innovators to conduct live experiments in a controlled environment with some regulatory relaxations for the limited purpose of the testing under a regulator’s supervision.
- It will help to develop a clear jurisdiction in case of overlapping areas involving multiple regulators, including RBI, SEBI, IRDAI, PFRDA, etc.
- It allows FinTech to conduct limited-space field tests of the new product before a wider-scale launch.
- Regulators obtain first-hand empirical evidence on the benefits and risks of emerging technologies and their implications.
The initiative by the RBI will help the FinTech sector to continue its growth and better perform in the real-world situations.