Tag Archives: regulatory sandbox

regulatory sandbox – fintech solutions

PIB press release dated 19th october, 2020

The International Financial Services Centres Authority (IFSCA), with an objective to develop a world class FinTech hub at the IFSC located at GIFT City in Gandhinagar (Gujarat, India), endeavours to encourage the promotion of financial technologies (‘FinTech’) initiatives in financial products and financial services across the spectrum of banking, insurance, securities and fund management.

As a step towards attaining this vision, IFSCA has introduced a framework for “Regulatory Sandbox”. Under this Sandbox framework, entities operating in the capital market, banking, insurance and financial services space shall be granted certain facilities and flexibilities to experiment with innovative FinTech solutions in a live environment with a limited set of real customers for a limited time frame. These features shall be fortified with necessary safeguards for investor protection and risk mitigation. The Regulatory Sandbox shall operate within the IFSC located at GIFT City.

All entities (regulated as well as unregulated) operating in the capital market, banking, insurance and pension sectors as well as individuals and startups from India and FATF compliant jurisdictions, shall be eligible for participation in the Regulatory Sandbox. Entities desirous of participating in the sandbox to showcase their innovative FinTech solutions, concepts and business models shall apply to IFSCA.

IFSCA shall assess the applications and extend suitable regulatory relaxations to commence limited purpose testing in the Sandbox. The details on the eligibility criteria, the application and approval process and other operational aspects of the Sandbox have been provided in the circular.

As an additional steps towards creating an innovation-centric ecosystem in the IFSC, IFSCA has proposed the creation of an “Innovation Sandbox”, which will be a testing environment where FinTech firms can test their solutions in isolation from the live market, based on market related data made available by the Market Infrastructure Institutions (MIIs) operating in the IFSC. The Innovation Sandbox will be managed and facilitated by the MIIs operating within the IFSC.

Further details on the framework for Regulatory Sandbox are available on the IFSCA website at the URL: https://ifsca.gov.in/Circular

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Regulatory sandbox

SEBI circular dated 5th June, 2020 laying down a framework for regulatory sandbox in India. Regulatory sandbox is basically a framework set up by the regulators allowing FinTech start ups and innovators to experiment with FinTech solutions in a live environment on a limited set of real customers within a limited time frame. Earlier they had allowed entities not regulated by SEBI to carry out offline testing of their proposed solutions. Now the SEBI is allowing regulated entities to carry out the live testing of their solutions in the Innovations Sandbox. For that purpose detailed framework has been laid down by SEBI guiding the eligibility criteria, applications process, evaluation criteria, regulatory exemptions, submission of interim reports, extending or exiting the sandbox, obligations, rights and responsibilities of the applicants and the users.

Details of the framework can be found in this link


This is quite interesting as it gives leeway to the start ups to carry out live testing of their solutions in a controlled environment. It should be quite exciting for the start ups.

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regulatory sandbox

SEBI board meeting minutes dated 17th february 2020

Regulatory Sandbox Framework
“Regulatory Sandbox” refers to a live testing environment where new products,
processes, services and business models can be deployed, on a limited set of
eligible customers, for a specified period of time, with certain relaxations in the
extant SEBI regulations and guidelines.
To begin with, all entities registered with SEBI under Section 12 of the SEBI Act
1992, shall be eligible for testing within the Regulatory Sandbox. An entity can
participate on its own or use the services of a FinTech firm. The registered entity
shall be treated as the principal applicant, even if it uses the services of a FinTech
firm, and shall be solely responsible for testing of the solution in the sandbox.
SEBI has considered the cross domain approach for Regulatory Sandbox, wherein
a regulated entity shall be permitted to test solutions for activities for which it is not
The Board deliberated the proposal of regulatory framework to facilitate and
operationalize the Regulatory Sandbox (‘sandbox’) framework by inserting a
common chapter in respective regulations of SEBI for granting limited certificate of
registration to the entity interested in applying for testing in the Regulatory
Sandbox. This concept of limited registration shall facilitate the entities to operate
in a Regulatory Sandbox without being subjected to the entire set of regulatory
requirements to carry out that activity.

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