RBI’s regulatory sandbox: Five products related to MSME lending tested as part of the third cohort under the regulatory sandbox by the Reserve Bank of India (RBI) have been found viable for adoption by regulated entities subject to compliance with applicable regulatory requirements, the central bank announced recently. The third cohort was announced in September 2021 and applications from eight entities were selected out of 22 applications for testing their solutions in June last year.
The five entities whose products were found viable, according to the RBI statement on October 27, were first, FinAGG Technologies for its solution ‘Quick Cash Flow that enables a completely digital cash flow-based credit underwriting process. Second, M1xchange Small-Small by Mynd Solutions, a one-stop plug-and-play platform for cash-flow-based financing to small MSME sellers on TReDS. Third, Rupifi Technology Solutions which offers ‘Pay by Rupifi’ to provide MSMEs real-time access to working capital through digital credit lines which can be used to make purchases from B2B marketplaces.
Fourth, GST Sahay app by SIDBI developed using Open Credit Enhancement Network (OCEN) and Account Aggregator framework for invoice-based finance to MSMEs and fifth, LENDperfect – Shishu Mudra by SysArc Infomatix that enables end-to-end digital straight-through process (STP) journey for MSME Mudra loans in partnership with banks.
RBI said the third cohort on MSME Lending is now open for ‘on tap’ application. A regulatory sandbox by RBI involves live testing of products or solutions by eligible entities on a pilot basis following which the central bank seeks ‘on tap’ applications according to experience gained and the feedback received from stakeholders.
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Last week, the central bank announced the opening of the fifth cohort without any specific theme for eligible entities based on the feedback from various stakeholders and to foster innovation in various areas pertaining to financial technology.
RBI’s Deputy Governor Swaminathan J reviewing the credit flow to MSMEs during the 28th Meeting of the Standing Advisory Committee (SAC) in September had stressed on the need for collaborative efforts among all stakeholders to unlock the full potential of MSMEs. He also emphasised the significant role of the MSME sector, particularly in the context of the goal of attaining developed economy status by 2047, FE had reported.