It is the duty of self-regulatory organisations in the financial technology space to sensitise the sector and prepare them for smoother implementation of regulatory actions, the Reserve Bank of India's Deputy Governor T. Rabi Sankar said.
"A good fintech innovative system should be able to anticipate, prepare for, and build into the products and services that they are offering of these kinds of expected regulatory actions, and that's not going to be easy," Sankar said at the Global Fintech Festival 2024 on Thursday.
He said that the fintech industry is still very young and has a lot of growing up to do. "I think the SROs have to start preparing the sector to face the reality that, as you mature, it has to show in the way you behave."
This follows RBI's approving the Fintech Association for Consumer Empowerment as a self-regulatory organisation for the fintech sector on Wednesday.
As fintechs are not regulated, this makes it more challenging for them to demonstrate and invoke public trust, he said. SROs play a meaningful role as fintechs have not yet created enough of a track record that enables evaluation of how trustworthy the industry is.
"SROs should work consciously and consistently to create conditions that are favourable to competition, as it is essential to make markets effective and efficient," he said.
Sankar also said that there should be two-way communication between the fintech industry and the regulator. He also acknowledged that it is difficult to adjust to regulations post-innovation and that coordination between the fintech industry and SROs is important.
As fintechs are expanding their footprint, expectations are high from industry players, Sankar said, adding that the RBI is confident of the fintech SROs.
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