 "RBI, Reserve Bank of India")
The Reserve Bank of India (RBI) on Tuesday said three entities had completed the test phase of the fourth cohort of the Regulatory Sandbox with 'Prevention and Mitigation of Financial Frauds' as its theme.
Out of the six applications selected by the banking regulator for testing in January 2023, the products from these three entities exited the regulatory sandbox cohort.
RBI mentioned entities namely Bahwan Cybertek, napID Cybersec, and Trusting Social which completed the test phase of the cohort.
Products which participated in the regulatory sandbox include transaction monitoring for banks, authorisation of transactions, and assessment of default risk of a loan applicant, respectively.
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“The products found acceptable under this cohort may be considered for adoption by regulated entities subject to compliance with applicable regulatory requirements. Further, as per the provisions of the Enabling Framework for Regulatory Sandbox, the fourth cohort on ‘Prevention and Mitigation of Financial Frauds’ is now open for ‘on-tap’ applications,” the RBI said in a press release.
A regulatory sandbox refers to live testing of new products or services in a controlled regulatory environment for which regulators may or may not permit certain regulatory relaxations for the limited purpose of testing. It enables the regulator, financial service providers, and customers to conduct field tests to collect evidence on benefits and risks of new financial innovations while monitoring and containing their risks.
The different processes and stages involved in a regulatory sandbox include a preliminary screening, the assessment of applications and shortlisting, formulation of test design and integration phase, and a testing and evaluation phase.
The target applicants for entry to the regulatory sandbox include fintechs, banks, and companies partnering with or providing support to financial services businesses, among others.
The sandbox may run a few cohorts (end-to-end sandbox process), with a limited number of entities in each cohort testing their products during a stipulated period, according to the Enabling Framework for Regulatory Sandbox.
