Draft Enabling Framework for Regulatory Sandbox


The Reserve Bank of India (RBI) first draft of its "Enabling Framework for Regulatory Sandbox" available for public comment, to be submitted by May 08, 2019. The draft framework was prepared by the Inter-Regulatory Working Group on FinTech and Digital Banking in India "to look into and report on the granular aspects of FinTech and its implications, so as to review and reorient appropriately the regulatory framework and respond to the dynamics of the rapidly evolving FinTech scenario." The Working group consists of representatives from RBI, SEBI, IRDA, PFRDA, NPCI, IDRBT, select banks and rating agencies and is based upon the earlier released  Report of the WG on FinTech and Digital Banking. In addition to general innovative products and services, the RBI's regulatory sandbox framework specifically addresses innovation related to Distributed Ledger Technology (DLT), blockchain, Initial Coin Offerings (ICO) and cryptocurrency. 

Objectives of the RBI Regulatory Sandbox (RS) (Excerpt)

The RS provides an environment to innovative technology-led entities for limited-scale testing of a new product or service that may or may not involve some relaxation in a regulatory requirement before a wider-scale launch. The RS is, at its core, a formal regulatory programme for market participants to test new products, services or business models with customers in a live environment, subject to certain safeguards and oversight. Draft Enabling Framework for Regulatory Sandbox. The proposed financial service to be launched under the RS should include new or emerging technology, or use of existing technology in an innovative way and should address a problem, or bring benefits to consumers.

List of technological innovations which may be considered for entry into the RS (see Sec. 6.1.1 and 6.1.2)

  • Innovative Products/Services
    • Retail payments
    • Money transfer services
    • Marketplace lending
    • Digital KYC
    • Financial advisory services
    • Wealth management services
    • Digital identification services
    • Smart contracts
    • Financial inclusion products
    • Cyber security products
  • Innovative Technology
    • Mobile technology applications (payments, digital identity, etc.)
    • Data Analytics
    • Application Program Interface (APIs) services
    • Applications under block chain technologies
    • Artificial Intelligence and Machine Learning applications

The following list may not be acceptable for entry into the RS (see Sec. 6.3)

  • Credit registry
  • Credit information
  • Crypto currency/Crypto assets services
  • Trading/investing/settling in crypto assets
  • Initial Coin Offerings, etc.
  • Chain marketing services
  • Any product/services which have been banned by the regulators/Government of India


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Thursday, April 18, 2019
Document Authors: 
Reserve Bank of India (RBI)
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