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BENGALURU/CHENNAI: Financial sector regulators are all taking initiatives to encourage startups in their segments by making data and systems available to them. The RBI had last month announced a regulatory sandbox where startups could test out new financial products in real-time with limited regulations. On Monday, insurance regulator IRDAI and stock market regulator Sebi also announced similar initiatives.

IRDAI said that with the regulatory sandbox approach, fintechs “will have a safe and conducive space to experiment...and where the consequences of failure can be contained."

IRDAI said the sandbox will hope to boost growth in the fintech space and increase the pace at which innovative solutions are developed, with guidance from the regulator and industry experts over meeting regulatory requirements and ensuring policyholder protection.

Based on the solutions fintechs come up with, IRDAI said that it could also look at relaxing some of the regulations to accommodate new innovations.

Sebi’s sandbox creates a platform for offline testing of proposed solutions of startups in isolation from the live market. It also aims to help fintech firms to secure more funding and allow developers to explore industry challenges.

“One of the most important components of this sandbox is the access to securities market related data, which will help users to test and improve their fintech solutions,” Sebi said in a statement. The data sets include depositories’ data relating to holding data, KYC, transactions data like order log and trade log.

Commenting on Sebi’s initiative, Jimeet Modi, founder & CEO of Samco Securities , said it could help establish a healthy balance between market stability and protecting investors while providing enough room for companies to develop latest innovations. “We intend to test a few solutions ourselves once the sandbox becomes available,” he said.

For the IRDAI sandbox, the applicant (an insurance company/broker or individual) should have a net worth of Rs 10 lakh and a standing of one financial year.

The Sebi guidelines call for applicants with “a genuine need for testing solution.” Applicants should be able to prove that the solution cannot be developed properly without testing in the sandbox environment.

Fintech startups are increasingly coming up with innovative solutions and are attracting funding. While some serve retail customers, others serve to improve the operations of other businesses.

