Fintech Founders Partner To Set Up New Self Regulatory Organisation

The members of industry body Fintech Convergence Council (FCC) are reportedly planning to set up a new entity to get the RBI’s licence for self-regulatory organisation (SRO) for the fintech sector. 

A report by Financial Express said that the new body will include Jupiter founder Jitendra Gupta, Fi Money’s Sujith Narayanan, Signzy’s Ankit Ratan, Onecard’s Anurag Sinha, among others. 

The FCC was formed under the Internet and Mobile Association of India (IAMAI). It currently represents 175 fintech companies, including Dhan, Angel One, Groww, InsuranceDekho, Jar, among others, across sectors.  

The FCC declined to comment on the formation of the consortium to get SRO licence from the RBI, while Gupta didn’t respond to Inc42’s queries on the development.

This comes after the RBI, in July last year, notified the guidelines for recognising SROs for the fintech sector. The SROs will act as a bridge between the industry and the central bank, setting industry standards, ensuring compliance and promoting ethical practices.

To get the licence, a fintech SRO is required to have a minimum net worth of INR 2 Cr within a year of receiving the tag from the RBI, have an Indian domicile, among other requirements. 

Bid To Become Second Fintech SRO: If the new body manages to get the RBI’s nod, it will become the second such independent regulatory body in India. 

Last August, the RBI gave the first SRO licence to Fintech Association for Consumer Empowerment (FACE) after evaluating three such applications. 

The organisation counts the likes of Fibe, CRED, Groww, InCred, Paisabazaar, among 70 of its members. It claims that its members account for 80% of digital lending business volumes.

Since inception, FACE has been working on helping users dodge scams in the lending industry, informing the general public about loan disbursements over a particular time and communicating with the RBI over issues faced by the fintech industry. 

The other two applications that the RBI had evaluated were of the FCC and the Digital Lenders Association of India (DLAI), according to reports. 

In the case of FCC, the SRO guidelines by the RBI require setting up of a separate entity under the FCC as the latter is just a committee with the IAMAI, a source told FE today. 

What Can SROs Do?: In essence, they are aimed at striking a balance between growth and mitigation of risks.

These bodies can enable companies to themselves frame guidelines that are more suitable to the requirements of  the consumers. 

“Achieving a healthy balance between facilitating innovation by the industry on the one hand, and meeting regulatory priorities in a manner that protects consumers and contains risk, on the other, is crucial to optimising the contribution of the fintech sector,” the RBI said while defining the role of SROs earlier.

What’s The Need For Multiple SROs?: A number of entities are currently looking to get the RBI’s licence for the SRO. Last July, it was reported that some Indian banks were planning to set up a SRO. 

The context of multiple SROs lies within the size of the fintech industry in India.

The country’s fintech market surpassed the $793 Bn mark in 2024 and is projected to reach a size of $2.1 Tn by 2030. 

The industry houses multiple sub-sectors, including digital payments, neobanking, insurance, investment tech, lending, et al. Needless to say, that a common policy benchmark might not work for the entire industry.

“Due to the diverse nature of fintechs, it is likely that there might be more than one SRO for each different sector, where a fintech may have to be a member in more than one SRO. The SRO framework anticipates an ecosystem with multiple SROs and encourages all fintechs to be a member of at least one recognized SRO,” VC firm 3one4Capital said earlier.