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Indian central bank publishes criteria for participation in regulatory sandbox

The Reserve Bank of India (RBI) has published the “fit and proper” criteria it will use to select biometrics companies and other participants in its Regulatory Sandbox for live-testing new products and services. The Hindu Business Line reports that all applicants should be companies incorporated or registered in India, or in the case of banks licensed to operate in the country.

Entities should have a minimum net worth of 2.5 million rupees (US$35,000), and the entity’s promotor or director should be “fit and proper.”

Products or services should be ready for market deployment, and the company must be able to demonstrate efforts to comply with existing laws and regulations on consumer data protection and privacy. Fintechs, banks, financial institutions, and any company partnering with or providing support to financial services businesses are eligible to use the RBI sandbox. Products and services that could be considered for testing in the Regulatory Sandbox, according to the report, include retail payments, money transfer services, marketplace lending, digital KYC, digital identification services, smart contracts, financial inclusion products, and cybersecurity products. Innovative technologies for mobile applications, such as for payments or digital identity, data analytics, API services, blockchain, artificial intelligence and machine learning applications could also be considered for testing.

The RBI recently updated its KYC rules to allow non-biometric offline Aadhaar verification.

Some requirements relating to liquidity, board composition, management experience and other criteria could be relaxed by the RBI on a case-by-case basis, according to The Hindu Business Line.

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