RBI has issued an updated circular on “Enabling Framework for Regulatory Sandbox” on February 28, 2024 (“Circular”). The Regulatory Sandbox (“RS”) refers to live testing of novel products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing. The RS allows the regulators, the innovators, the financial service providers (as potential deployers of the technology) and the customers (as final users) to conduct field tests to collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and containing their risks.
As a part of the testing process, the RS 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 which shall be based on thematic cohorts focusing on financial inclusion, payments and lending, digital KYC, etc. The timeline for the cohorts to be completed, vide this Circular, has been extended till 9 (nine) months (earlier 7 (seven) months), starting from receipt of complete and eligible applications, i.e., excluding the preliminary screening period. The guidelines further require sandbox entities to ensure compliance with the provisions of Digital Personal Data Protection Act, 2023
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