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Sebi and IRDAI launch initiatives to boost startups

According to reports, financial sector regulators are likely to take initiatives to encourage startups in their segments by making data and systems available to them. In fact, the RBI had announced a regulatory sandbox earlier this year, where startups could test out new financial products in real time with limited regulations. With this, the insurance regulator IRDAI and markets regulator Sebi, has also announced similar initiatives.

As per reports, IRDAI said that with the regulatory sandbox approach, “fintechs will have a safe and conducive space to experiment and where the consequences of failure can be contained. the sandbox will hope to boost growth in the fintech space and increase the pace at which innovative solutions are developed, with guidance from the regulator and industry experts over meeting regulatory requirements and ensuring policyholder protection.”

IRDAI also stated that it could also look at relaxing some of the regulations to accommodate new innovations, based on the solutions fintechs come up with.

Sebi’s sandbox creates a platform for offline testing of proposed solutions of startups in isolation from the live market.

Sebi quoted in a statement, “one of the most important components of this sandbox is the access to securities market related data, which will help users to test and improve their fintech solutions”. The data sets include depositories’ data relating to holding data, KYC, transactions data like order log and trade log.

According to reports, for IRDAI sandbox, the applicant (an insurance company/broker or individual) should have a net worth of ¿ 10 lakh and a standing of one financial year. Meanwhile, Sebi guidelines call for applicants with “a genuine need for testing solution.”

Fintech startups are increasingly coming up with innovative solutions and are attracting funding. While some serve retail customers, others serve to improve operations of other businesses.

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