19 February, New Delhi: Markets regulator, Securities, and Exchange Board of India (Sebi) has decided to allow the use of fintech innovations for live testing of new products, processes, services and business models on a limited set of eligible customers for a specified period of time.

Sebi has proposed a regulatory framework to facilitate and operationalise the Regulatory Sandbox for granting a limited certificate of registration to the entity interested in applying for testing. This has been done without being subjected to the entire set of regulatory requirements to carry out that activity.

“To begin with, all entities registered with Sebi under Section 12 of the Sebi Act 1992, shall be eligible for testing within the Regulatory Sandbox,” Sebi said in an official note.

The regulatory sandbox from Sebi to promote innovations in the fintech space comes in the aftermath of the Reserve Bank of India launched its own fintech regulatory sandbox in 2019.

According to Avimukt Dar, partner, IndusLaw, a key distinction in the regulatory sandbox between RBI and Sebi is that, while RBI is focussed on greater financial inclusion, Sebi seems primarily focussed on greater adoption of technology by market participants.

“Unlike RBI, Sebi had laid out a very clear process flowchart for applications at the draft stage, though it has not yet identified focus areas. Its sandbox is much more ‘blue sky’ at this stage,” Dar said.