Responsible Innovation through Regulatory Sandbox(RS)

CIRCULAR Circular no.: PFRDA/2022/15/FT&DA/01 28thJuly, 2022 To, All Prospective Participants in Inter Operable Regulatory Sandbox (IoRS) & other Stake Holders Subject: Responsible Innovation through Regulatory Sandbox(RS) Regulatory Sandbox (RS) nurtures responsible innovation in Financial/Pension/Retirement Planning services to promote efficiency, which eventually benefits the investors, Subscribers, consumers and users. It is a formal regulatory program for market participants/Stake holders to test new products/modified variants, services or creative business models with users in an environment, subject to certain safeguards, reasonable caution and adequate oversight. The proposed financial service which is to be launched under the RS should invariably include new or emerging technology or use of existing technology in an innovative way and should necessarily address a problem, fill a void and bring benefits to consumers. 2. RS is a framework that allows Fin-tech innovators to perform live experiments in a controlled environment under supervision of PFRDA or the respective Sector Regulator. One of the significant benefits of the RS, it facilitates the conduct of field tests to accumulate evidence with respect to advanced benefits and risks of new financial innovations. 3. RS provides a structured platform in the financial ecosystem with outcome of new, Innovative, relevant and cost-effective Fin-tech technologies that possibly convert to provide the consumers with the cost optimized financial/pension products. Considering immense benefits of RS, an Inter Regulatory Technical Group (IRTG) on Fintech constituted. 4. Standard Operating Procedure (SOP) for Inter Operable Regulatory Sandbox (IoRS) designed and approved by the IRTG on Fintech. The SOP (Annexure) facilitates for the testing of innovative hybrid financial product/services falling within the regulatory ambit of more than one financial sector Regulator. Interested Innovators, start-ups, fin tech players etc. are welcome to apply for participating in the IoRS. 5. Consent for operating in RS provided after the scrutiny of the application by Principal Regulator (PR) and the Associate Regulators (AS) as per IoRS-IRTG framework. Those innovative ideas that does not fall under the ambit of more than one Regulator will be taken up the PFRDA/ respective Regulator as the case may be. 6. The interested participants of RS can apply and write to fintech-data@pfrda.org.in. Yours Sincerely Chief General Manager Digitally signed by K MOHAN GANDHI Annexure Inter-operable Regulatory Sandbox (Standard Operating Procedure) IoRS –Process and Participants  A mechanism to facilitate testing of innovative hybrid financial products/services falling within the regulatory ambit of more than one financial sector regulator.  The financial regulators that are members of the IRTG on FinTech shall provide specific consent to participate in the IoRS arrangement under the aegis of IRTG on FinTech. Governance Structure 1. Coordination Group (CG) of IoRS (FinTech Department of RBI)  Provide necessary secretarial support  Conduct preliminary scrutiny of the application form based on the minimum eligibility criteria under whose remit the dominant feature of the product falls  Forward the application to the concerned PR and Associate Regulator (AR) under whose purview the innovation falls. 2. Principal Regulator (PR)  Conduct a detailed scrutiny of the application based on its own framework.  Co-ordinate with AR(s) regarding aspect of the product, which falls under their remit  PR shall reserve the right on admissibility of the hybrid product/solution/innovation as per its RS framework and accordingly communicate to the applicant Governance Structure  Finalize the test design in consultation with AR(s)  Communicate the final decision to CG/IRTG on FinTech, for information  To evaluate the product as per the framework of the PR, which may also reflect  Appraisal by the AR(s), while deciding on suitability and viability of the product/services. 3. AR  To provide specific inputs, stipulate condition regarding aspect falling under its remit for parameters to be tested, boundary condition, risks to be monitored, etc.  To provide the inputs at the earliest but not later than 30 days from receipt to preference from the PR  To assist the PR in finalization of the test design 4. Designing of the application form and other features  The application form should contain important features of the product, innovations proposed, remit of regulators under which the hybrid product falls and ‘Principal Regulator (PR)’ and ‘Associate Regulator’ (AR) therefor.  A sub-group comprising of a representative each from members of IRTG on FinTech shall be constituted for designing of the application form.  Draft application designed by the sub-group shall be presented to the Group for approval  The application IoRS shall be on tap basis ’in the prescribed application form 5. Other features The dominant feature shall be decided on the two factors i. Type of enhancement to existing products like loans, deposits, capital market instruments, insurance, G-sec instruments, pension products, etc., ii. The number of relaxations sought by the entity for undertaking the test under the IoRS.  Post testing in IoRS, regulatory dispensation required from PR and AR before launching the product in the market.  The product being admitted under the IoRS shall be published by the concerned regulator, specifically indicating that, it is under IoRS of IRTG on FinTech. Please write to fintech-data@pfrda.org.in for further assistance परिपत्र परिपत्र संख्या : PFRDA/2022/15/FT&DA/01 28 जुलाई, 2022 फिनटेक विभाग इन्टि ऑपिेशनल िेगुलेटिी सैंडबॉक्स (IoRS) के सभी संभावित प्रवतभावगयों औि अन्य वितधािकों में के वलए विषय : िेगुलेटिी सैंडबॉक्स (RS) के माध्यम से उवित निािाि के सन्दभभ में िेगुलेटिी सैंडबॉक्स, वनिेशकों, अवभदाताओं, उपभोक्ताओं औि उपयोगकताभओं को अंततः लाभावन्ित किने के उद्देश्य से वित्तीय/पेंशन/सेिावनिृवत्त योजना सेिाओं में उवित निािाि के माध्यम से दक्षता को बढ़ािा देता िै I यि बाज़ाि सिभावगयों/वितधािकों द्वािा जीिंत िाताििण में उपयोगकताभओं के साथ नए उत्पादों/उनके संशोवधत प्रकािों, सेिाओं या ििनात्मक व्यापाि मॉडल का पिीक्षण किने के वलए वनर्मभत एक औपिारिक वनयामक कायभक्रम िै, जो फक उवित सािधानी औि पयाभप्त वनिीक्षण के अधीन िै I िेगुलेटिी सैंडबॉक्स के तित शुरू की जाने िाली प्रस्तावित वित्तीय सेिा में सदैि नई या उभिती हुई तकनीक सवममवलत िोनी िाविए या इसमें मौजूदा तकनीक के उपयोग का कोई नया तिीका शावमल िोना िाविए, यि कवमयों को भिने िाली औि ग्रािकों को लाभ प्रदान किने िाली िोनी िाविए I 1. िेगुलेटिी सैंडबॉक्स (RS) एक ऐसी संििना िै, जो फिनटेक अन्िेषकों (Fintech Innovators) को पीएिआिडीए या फकसी अन्य क्षेत्र वनयामक के वनिीक्षण में एक वनयंवत्रत िाताििण में अपने लाइि प्रयोग किने की अनुमवत देता िै I िेगुलेटिी सैंडबॉक्स (RS) के मित्िपूणभ लाभों में से एक िै वित्तीय निािािों के अवग्रम लाभों औि जोविमों के समबन्ध में साक्ष्य जमा किने वलए क्षेत्र पिीक्षणों के संिालन की सुविधा प्रदान किता िै I 2. िेगुलेटिी सैंडबॉक्स (RS) निीन, प्रगवतशील औि लागत प्रभािी फिनटेक तकनीकों के साथ वित्तीय िाताििण में एक ऐसा मंि प्रदान किता िै जो संभितः उपभोक्ताओं को लागत अनुकूवलत वित्तीय/पेंशन उत्पाद प्रदान किता िै I िेगुलेटिी सैंडबॉक्स (RS) के असीवमत लाभों को देिते हुए, फिनटेक पि एक अंति वनयामक तकनीकी समूि (IRTG) का गठन फकया गया िै I 3. फिनटेक पि इन्टि िेगुलेटिी टेफिकल ग्रुप (IRTG) द्वािा इन्टि ऑपिेबल िेगुलेटिी सैंडबॉक्स (IoRS) के वलए मानक संिालन प्रफक्रया (SOP) को परिकवपपत औि अनुमोफदत फकया गया िै I मानक संिालन प्रफक्रया (SOP) (अनुलग्नक ) एक से अवधक वित्तीय वनयामकों के अधीन आने िाले िाइविड उन्नत वित्तीय उत्पाद/ सेिाओं के पिीक्षण की सुविधा प्रदान किते िैं I इन्टि ऑपिेरटि िेगुलेटिी सैंडबॉक्स (IoRS) में भाग लेने के इच्छुक अन्िेषक, स्टाटभ अप्स, फिनटेक प्लेयसभ आफद आिेदन कि सकते िैं I 4. िेगुलेटिी सैंडबॉक्स (RS) में संिालन के वलए सिमवत, IoRS-IRTG संििना के अनुसाि प्रमुि वनयामक औि सियोगी वनयामकों के द्वािा आिेदन की जांि के पश्चात् दी जाएगी I िे निोन्मेषी वििाि जो एक से अवधक वनयामकों के अवधकाि क्षेत्र में निीं आते, उन्िें पीएिआिडीए/संबंवधत वनयामक, जैसा भी मामला िो, के पास ले जाया जाएगा। 5. िेगुलेटिी सैंडबॉक्स (RS) में इच्छुक प्रवतभागी fintech-data@pfrda.org.in पि आिेदन कि सकते िैं I