The Reserve Bank of India (RBI), recently has announced a significant enhancement to its Regulatory Sandbox (RS) framework by introducing a ‘Theme Neutral’ ‘On Tap’ application facility. This initiative allows fintech innovators to submit applications at any time, irrespective of specific themes, promoting continuous and proactive engagement with emerging technologies.
Since its inception in 2019, the RBI’s Regulatory Sandbox has operated through thematic cohorts, facilitating the testing of innovative financial products while ensuring regulatory compliance. Building on the insights gained and stakeholder feedback, the RBI previously introduced an ‘On Tap’ facility in October 2021 for themes covered in closed cohorts. The latest ‘Theme Neutral’ approach further expands this framework, enabling a broader spectrum of innovations to be tested within the regulatory ambit.
Under the new facility, applications encompassing various technologies and themes can be submitted. The RBI has provided an illustrative list of areas for guidance, including digital financial literacy, digital lending, alternate credit scoring, e-KYC, identity verification and emerging technologies like Artificial Intelligence (AI), Blockchain, Machine Learning (ML), Smart Contracts and Tokenisation. Other focus areas include financial inclusion, mule account identification and tracking, open finance, RegTech, SupTech, solutions for Divyang (including voice/language-based financial services), grievance redressal and sustainable finance and climate risk mitigation.
This move underscores the RBI’s commitment to adapting to the rapidly evolving fintech landscape. By removing the constraints of predefined themes and allowing applications to be submitted at any time, the central bank aims to encourage continuous innovation and provide a dynamic environment for fintech companies to develop and test new solutions.
Interested entities can submit their applications, along with supporting documents, via email. Applications will be assessed under the provisions of the Enabling Framework for Regulatory Sandbox. This progressive step is expected to bolster India’s fintech ecosystem by offering startups greater flexibility and opportunities for experimentation, while safeguarding consumer interests and maintaining systemic integrity.
