Members of the Fintech Convergence Council (FCC), under the Internet and Mobile Association of India (IAMAI), are setting up a separate entity to secure the Self-Regulatory Organisation (SRO) licence from the Reserve Bank of India (RBI), people aware of the development told FE Online.
The new entity will be the second fintech SRO after the central bank recognised Fintech Association of Consumer Empowerment (FACE) as an SRO in the fintech sector (SRO-FT) in August last year.
“The SRO guidelines by the RBI require setting up of a separate entity under FCC as latter is just a committee with IAMAI,” said a source seeking anonymity.
“RBI has communicated previously that SRO is a mechanism for it to get validated feedback from the industry. Anyone who wants to engage with the regulator, an SRO will be a structured mechanism to communicate,” the source said.
The new SRO will include fintech startup founders such as Lendingkart founder Harshvardhan Lunia, Jupiter’s Jitendra Gupta, Fi Money co-founder Sujith Narayanan, Signzy co-founder Ankit Ratan, Onecard co-founder Anurag Sinha, and others.
“If you don’t set up an SRO then it is difficult to have structured conversation with RBI even if you are an active part of a regulated industry. It makes the lives of RBI and ecosystem players easy through an SRO with reduced uncertainty otherwise you sometimes don’t know what regulations are coming,” another source added.
A fintech-SRO is a recognition by the RBI granted to a non-governmental entity that acts as a regulatory body for fintech companies. The SRO sets industry standards, ensure compliance, and promote ethical business practices in the rapidly evolving fintech sector.
It also reduced regulatory burden on RBI by latter delegating oversight to the SRO for quicker decision making and sector-specific regulation. Moreover, SRO can enforce fair lending norms to prevent misuse of digital lending and payments.
