Following the footsteps of RBI, the insurance regulator IRDAI and stock regulator SEBI have announced that they will set up their sandboxes. The objective of setting these up is to encourage startups in their segments by extending data and systems available to them.
IRDAI stated that, with a regulatory sandbox in place, fintech startups would have a safe and accommodating space to beta-test new products.
IRDAI also believes that the sandbox will help supplement growth in the fintech space and will enable innovative solutions. Even more so with the guidance from the regulator and industry experts that the sandbox provides.
Based on the solutions the participants develop, the IRDAI said that it might even go as far as to relax the regulations in place currently to make room for these innovations.
To qualify for the IRDAI sandbox, the applicant (insurance companies/individuals) needs to have a net worth of Rs 10 lakh and be operational for one financial year.
Similarly, SEBI has also announced the launch of its sandbox. They aim to create a space where startups can conduct offline testing of innovative solutions in isolation. The sandbox will act as a proponent for startups to receive more fundings and tackle 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.
As per the guidelines published by SEBI, the applicant must have a ‘genuine need for testing solutions’. The applicant must prove that the solution cannot be adopted without a testing environment like the sandbox.
The establishing of such regulatory sandboxes will foster the growth of the finance sector. It will also introduce innovative technological solutions and tackle industry challenges.