RBI issues draft framework for fintech SRO
NEW DELHI: In order to promote self-regulation in the fintech sector, the Reserve Bank of India (RBI) has issued a draft framework for recognising Self-Regulatory Organisation (SRO) for the sector.
The draft framework released on Monday envisages an SRO that not only frames baseline standards and rules of conduct codes, but also effectively monitors and enforces them.
The Fintech SRO should be set up as a not-for-profit company registered under Section 8 of the Companies Act, 2013 to ensure transparency and clarity regarding the organisation’s purpose and activities, the Memorandum of Association (MoA) of the applicant company should explicitly state the operation as an SRO-FT as one of its primary objectives.
The draft framework also requires the applicant wanting to become an SRO to have sufficient net worth and demonstrate the capability of establishing the necessary infrastructure to fulfil the responsibilities of an SRO effectively, and consistently.
The framework requires the SRO to have a robust IT infrastructure and the ability to deploy technological solutions within a reasonable timeframe.
While the SRO should be domiciled in India, it can have members from anywhere. The SRO should not set up entities or offices overseas without the prior approval of the RBI.
According to the draft framework, members should perceive the SRO as a legitimate arbiter of disputes.