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RBI issues draft norms for fintech self-regulatory organizations

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The Reserve Bank of India (RBI) has unveiled draft norms for fintech self-regulatory organizations (SROs). In which emphasis on representative membership, independence and active participation is prominent.

The Reserve Bank of India (RBI) has unveiled a draft framework for setting up and recognition of Self-Regulatory Organizations (SROs) in the FinTech sector. The draft rules aim to promote innovation within the industry and ensure regulatory priorities for consumer protection and risk prevention.

Features of Self-Regulatory Organization for Fintech (SRO-FT)

1. Representative Membership

  • Membership should be voluntary and should include fintechs to ensure broad industry representation.
  • The SRO-FT should be acknowledged as the primary body for setting market standards and defining rules of conduct.

2. Development oriented

  • To actively contribute to the development of the industry by providing expertise, guidance and capacity-building programmes.
  • To set minimum eligibility criteria for members to raise industry standards.

3. Independence and impartiality

  • Acting independently to ensure impartial decision making.
  • Avoid conflicts of interest and maintain impartiality in oversight to prevent influence of any prominent member or group.

4. Dispute Resolution

  • To establish a transparent and impartial dispute resolution mechanism to be treated as a legitimate arbitrator.
  • To create confidence in the industry through reliable conflict resolution.

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5. Active participation

  • Motivating members to align with regulatory priorities.
  • To facilitate communication between industry players and regulatory bodies to promote necessary changes and compliance culture.

6. Information Store

  • Collect, analyze and disseminate relevant data about members' activities.

General Requirements

  • The SRO-FT should be set up as a not-for-profit company under Section 8 of the Companies Act, 2013.
  • Demonstrate sufficient net worth and capacity for effective infrastructure.
  • Maintain a strong IT infrastructure and deploy technical solutions promptly.
  • Taking prior permission from RBI for setting up institutions/offices abroad.

Membership Criteria

  • Representing the FinTech sector with a membership of entities of all sizes, stages and activities.
  • To include a roadmap for achieving comprehensive membership within a reasonable timeframe.


  • Guide member conduct, ensure adherence to standards and laws, and resolve complaints.
  • To formulate a code of conduct, industry standards and basic technology standards.
  • Developing standardized documents for specific needs within the FinTech sector.

governance standards

  • The Board of Directors (BOD) and Key Managerial Personnel (KMP) should possess professional competence, impartiality and integrity.
  • Adhering to appropriate and proper norms.
  • To follow guidelines for transparency, accountability, integrity and fairness.
  • To permit RBI to nominate or appoint observers on the SRO-FT Board, if necessary.

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Important facts for all competitive exams

1. RBI Draft Criteria for Fintech SROs:

  • RBI releases draft framework for fintech self-regulatory organizations (SROs).
  • SRO-FT membership will be voluntary and representative of the FinTech sector.
  • The focus needs to be on balancing innovation, consumer protection and risk control.

2. Features of SRO-FT:

  • Representative Membership.
  • Development oriented for industry growth.
  • Independence, impartiality and transparent dispute resolution.
  • Active engagement with regulatory priorities.
  • Information repository for relevant data.

3. General Requirements:

  • SRO-FT is a not-for-profit company under Section 8 of the Companies Act, 2013.
  • Demonstrate substantial net worth and strong IT infrastructure.
  • Obtain RBI approval for foreign entities/offices.

4. Membership Criteria:

  • Representation in fintech entities of all sizes and stages.
  • Inadequate representation may result in denial or annulment.

5. Task:

  • Guide member conduct and ensure adherence to standards and laws.
  • Create a code of conduct and industry standards.
  • Develop standardized documentation for the FinTech sector.

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6. Governance Standards:

  • BOD and KMP with professional competence and integrity.
  • Fit and follow proper norms.
  • Guidelines for transparency, accountability, integrity and fairness.
  • RBI may nominate supervisors on the SRO-FT Board.

7. Need for Industry Feedback:

  • Comprehensive questions on the number of SROs required and their membership.
  • Discussion on whether SRO-FT should include only unregulated members or a mix of regulated and unregulated.
  • Consensus is important for effective self-regulation.

8. Feedback from Industry:

  • Positive response from industry representatives acknowledging the comprehensive and collaborative approach of the SRO framework.

Important questions related to exam

  1. What is the primary objective of RBI's draft framework for Fintech Self-Regulatory Organizations (SRO-FTs)?
  2. What are the features an SRO-FT should have as per RBI?
  3. What are the general requirements proposed by RBI for SRO-FT?
  4. What criteria must SRO-FTs meet in terms of membership representation?
  5. What are the functions required from SRO-FT as per the draft rules?
  6. What governance standards have been outlined for the Board of Directors (BOD) and Key Managerial Personnel (KMP) of an SRO-FT?

Please share your feedback in the comments section!!

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