Nearly a dozen fintech startups moved to IFSCA innovation sandbox

The International Financial Services Centres Authority (IFSCA) has shifted nearly a dozen fintech startups to its innovation sandbox — a framework that allows live experiments in a controlled environment under a regulator's supervision.

“Till now we have approved nearly 27 applications in the fintech scheme, of which nearly 10-12 have been moved to the innovation sandbox. These companies will be offering various financial services, including KYC, for offshore investments," said Praveen Trivedi, executive director, IFSCA, on the sidelines of an event on Tuesday.

These financial technology companies are offering insuretech, banking, and capital markets related services for facilitating cross-border transactions, added Trivedi.

The regulatory sandbox initiative is to encourage fintech services across the spectrum of banking, insurance, securities and fund management.

As of October, 2022, the Securities and Exchange Board of India had approved only one application under the scheme while another was under process. The regulator, over the course of two years, had received a total of ten applications, of which eight were rejected.

The Reserve Bank of India. on the other hand, had announced the fifth cohort of the innovation sandbox in September last year. The central bank had released the framework in 2018.

IFSCA had first introduced the framework in October 2020 along with other financial market regulators. Later in October 2022, a standard operating procedure (SOP) was prepared by the inter-regulatory technical group on fintech to facilitate interoperability amongst the various regulators.

Further, on setting up of the international arbitration centre at GIFT City for faster dispute resolution, Trivedi said that the facility will provide an option to entities to choose as to which country’s law they would want to abide by.

“They (companies) go to Singapore because they have the option to choose any law, instead of just the Indian Contract Act. So, IFSC will also have the facility. They will have the option to choose the forum and the law, which will be the seat of arbitration as well as which type of law they want to be governed by. Even a party in the US and Australia can choose the law and work with us,” he added.