After creating a regulatory framework for the fintech community, especially payments banks and peer-to-peer lenders, well in advance, the Reserve Bank of India (RBI) will soon introduce a regulatory sandbox.
A regulatory sandbox would benefit fintech companies by way of reduced time to launch innovative products at a lower cost, Governor Shaktikanta Das had recently said. Currently, there are regulatory issues that block banks from directly opening core banking solutions to test various innovative products offered by the fintech community.
In the sandbox set-up, a bank can allow testing with dozens of fintechs. Globally, there are quite a few countries that have a regulatory sandbox. This is a progressive step and will encourage innovation but the RBI will have to keep a sharp watch on the entire digital banking space for any technology leakage, fraud and cyber attack.