RBI Approves FACE’s Application For Becoming SRO For The Fintech Sector

The Reserve Bank of India (RBI) has approved the application of the Fintech Association for Consumer Empowerment (FACE) for being recognised as a self-regulatory organisation (SRO) for the country’s burgeoning fintech sector.

Speaking at the Global Fintech Fest (GFF) on Wednesday (August 28), RBI governor  Shaktikanta Das said that the central bank received applications from three entities for being recognised as SROs for the fintech sector.

“In last year’s GFF, I had announced RBI’s desire to see at least one fintech sector SRO taking shape by GFF 2024. I am happy to announce that of the three industry entities who have applied for recognition as SRO, the RBI has granted recognition to one applicant, that is to one entity,” Das said.

He added that while one application has been returned with a provision for resubmission after meeting certain requirements, the third application is under examination.  

Later, in a statement, the RBI said that FACE is the entity which has been recognised as an SRO.

FACE counts the likes of CASHe, Fibe, CRED, Groww, InCred, among others, as its members. It claims that its members account for 80% of digital lending business volumes.

It is pertinent to mention that during GFF 2023, RBI deputy governor T. Rabi Sankar called for the creation of SROs in the fintech sector. The central bank issued draft norms for SROs in January to ensure compliance with statutory and regulatory requirements. It notified the final guidelines in May this year.

A media report last month said that banks were planning to set up an entity soon to apply for an SRO licence for the fintech sector.

Speaking during the event today, Das said, “Through regular consultations, feedback mechanisms and policy dialogues, the SROs would facilitate open communication and enable fintechs to stay informed about regulatory expectations and priorities.”

Emphasising that the RBI is committed to fostering a dynamic fintech sector, Das said, “The SROs, when constituted, are uniquely placed as an interface between the regulator and the fintech sector because these SROs would understand the requirements and the evolving technologies, they are closer to the ground, and they can sort of consolidate, synthesise, analyse and give practical, effective and stable and prudent recommendations to the RBI.”

Commenting on further fostering global integration and cooperation, the RBI governor said that the central bank digital currency (CBDC) is an area that could see possible international cooperation after the milestone UPI has created with collaborations across several countries.

It must be noted that CBDC has been under pilot since December 2022. Currently, features like programmability are being used to provide credit or government assistance to landless tenant farmers and carbon credits to farmers through CBDC. 

“While we have successfully demonstrated the interoperability of CBDC with retail fast payment systems like the UPI, we continue to gain from our experimentation on offline solutions. As we make progress, we would be happy to cooperate with other nations in their CBDC efforts,” said Das.

Das added that deepening the country’s digital public infrastructure (DPI) further is another key policy priority for the central bank. DPI, which encompasses frameworks like digital identity (Aadhaar), universal fast retail payments (UPI) and targeted payment solutions like platform for bill payments, will enhance the efficacy of the financial system in general, he added.