REGULATORY SANDBOX

Subject : Economy

Context : Testing of products under the RBI’s regulatory sandbox, which was delayed on account of COVID-19 pandemic, has commenced, with two entities starting the ‘test phase’ with their products.

Concept :

• The central bank had announced opening of the first cohort under regulatory sandbox, with ‘Retail Payments’ as its theme, in November last year.
• It had received applications from 32 entities, of which six were selected for the ‘test phase’.
• Regulatory sandbox usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain relaxations for the limited purpose of the testing.
• The regulatory sandbox allows the regulator, innovators, financial service providers and customers to conduct field tests to collect evidence on the benefits and risks of new financial innovations.
• The objective of the regulatory sandbox is to foster responsible innovation in financial services, promote efficiency and bring benefit to consumers.