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SRO for fintechs will bring uniformity, help in compliance adherence, says DLAI CEO

A Self-Regulatory Organisation for Fintechs (SRO-FT), as has been proposed by the RBI, would bring standardisation and help in distinguishing serious players from the rest of the lot, said Jatinder Handoo, CEO, Digital Lenders Association of India (DLAI).

“At present , the Indian fintech industry is diverse in nature, hence the priorities and their representations are also divergent,” Mr. Handoo said in an e-mail interview.

“For members of an SRO-FT, the single biggest benefit would be a credible platform to take forward genuine, common voice of fintech players to appropriate offices and contribute positively in the regulatory and policy making dialogue which affects the entire sector,” he said.

“Additionally, it will bring a common minimum standardisation in processes like addressing customer grievances or common Leading Service Providers (LSP) agreements and forging sectoral partnerships,” he added.

“SRO-FT will act as a repository for sectoral data and it will release credible data backed reports regularly, it will bring more transparency and openness to the system and hence, will also reinforce investors’ and policy makers’ confidence and interest,” he further said.

This comes amid a high decibel campaign by a section of the fintech industry contending that the Reserve Bank of India (RBI) as regulator is ‘stifling innovation’ by stressing on compliances. The RBI had recently barred Paytm Payments Bank Ltd. from accepting any further deposits and ordering the closure of its wallet, nodal and other accounts.

The RBI, whose primary tasks include preserving financial stability by ensuring that regulated entities (REs) follow the prescribed regulations, has already set into motion steps for the establishment of a framework for a self-regulatory organisation (SRO) for fintech companies with an objective to set standards for the industry, aid in oversight and enforcement, and provide grievance redressal and dispute resolution.

The process, which is at a feedback stage currently, is expected to be formalised shortly.

“This approach could empower the sector to demonstrate its commitment to responsible conduct and innovation even in the absence of formal regulation,” the RBI had said in a release in January. “Through collaboration, the industry could collectively identify and address challenges, foster an environment where innovation flourishes, and guide a shared commitment to ethical business practices,” it added.

Self-regulation would also offer the advantage of adaptability to rapid technological advancements and evolving market dynamics, the RBI had said.

DLAI, which complies with the RBI’s omnibus framework requirements, plans to apply for an SRO licence as and when it would be notified. Registered as a company in 2016, DLAI is fostering a conducive environment for ease of doing business, supporting responsible market conduct, promoting market stability, ensuring client protection and aligning with policy priorities of the Government and is working to strengthen the Indian economy through fintech, Mr. Handoo asserted.

The CEO said DLAI had been working hard to lay down the foundation for a strong SRO.

“Aspects such as governance, code of conduct, customer grievance redressal systems, capacity building workshops are some of the things we have focused on during the last few months,” he said.

“We believe digital financial services are empowering and through DLAI , I am looking forward to playing the role of a catalyst,” he added.

He said India’s soft diplomacy involving the export of India stack was also helping.

“DLAI as an Industry association, proactively engages with representative industry bodies in geographies like Philippines, EU , MENA on areas like common best practices, research and innovation and investment opportunities. Many have evinced interest in understanding the applicability of India’s Digital Public Infrastructure in financial inclusion in these countries,” Mr. Handoo added.

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