Fintech SRO should be development-oriented, independent: RBI draft
- The Reserve Bank of India (RBI) has released a draft framework for self-regulatory organisations (SROs) in the fintech sector.
Self Regulatory Organisations (SROs)
- An SRO is a non-governmental organisation that sets and enforces rules and standards relating to the conduct of entities in the industry (members).
- Objective: To protect the customer and promote ethics, equality, and professionalism.
- It can act as a watchdog and encourage members to adopt responsible and ethical practices.
- It can provide a link between the regulator and market participants through a less formal set-up.
- Earlier, in September 2023, RBI had asked fintechs to establish an SRO themselves.
RBI’s Draft Framework
- An SRO in the fintech sector should operate independently, be development-oriented and actively contributing to the industry's growth.
- It should maintain impartiality, avoid conflicts of interest, and ensure unbiased oversight over its members.
- Independence would enhance the reputation of the SRO-FT as a neutral and reliable entity, essential for gaining the trust of both industry participants and regulators.
Prelims Takeaway
- Self Regulatory Organisations (SROs)
- Fintech Industry
- Reserve Bank of India (RBI)