RBI Issues Guidelines For Fintech Self-Regulatory Organisations

The Reserve Bank of India has issued guidelines for fintech self-regulatory organisations on Thursday, defining the characteristics, membership eligibility, and other roles and responsibilities. With this, the regulator has initiated the process of recognising SROs and invited applications from eligible organisations.

In its guidelines, RBI mentioned that an applicant for a fintech SRO must be set up as a not-for-profit company.

Here are some of the other eligibility criteria for applicants:

• (It) Should represent fintech sector with membership across all entities.

• Should have a minimum net worth of Rs 2 crore within one year after recognition as an SRO-FT or before start of operations.

• Should have a memorandum of association, explicitly stating the operation as an SRO-FT as its primary objective to ensure transparency

• Must show the capability of establishing necessary infrastructure to fulfil the responsibility of SRO-FT and have a robust IT infrastructure

• Must have systems for managing ‘user harm’ instances that are reported to it or given by the RBI to it.

In these guidelines, the regulator has also defined the membership criteria. It includes:

• Applicant should represent the fintech sector with membership across entities.

• In case of inadequate representation, a roadmap must be included for achieving it within a reasonable time, at the time of application.

• Should comprise members that are fintechs and membership should be voluntary.

• Fintech SRO must be domiciled/registered in India. However, those domiciled outside India can be members.

• Membership in the fintech SRO must be from fintechs that are currently not regulated by any financial sector regulator, but it may also be open to regulated entities, other than banks.

RBI has also defined the roles and responsibilities of fintech SROs, spanning across oversight and enforcement, grievance redressal and even responsibilities towards RBI, among others.

The final set of guidelines comes after the regulator published a draft framework in December 2023 and invited comments/feedback from the industry.

In September, NDTV Profit reported that the RBI is working on building the first SRO for the Indian fintech industry.