The Reserve Bank of India (RBI) has reduced the net worth requirement for applicants for entry to the Regulatory Sandbox (RS) to foster innovation in financial services. Further, the central bank has allowed partnership firms and Limited Liability Partnership (LLPs) to participate in RS.

RS refers to the live testing of new products or services in a controlled/ test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing.

As per the modified enabling framework, an entity seeking entry to RS shall have a minimum net worth of ₹10 lakh as per its latest audited balance sheet against the existing ₹25 lakh.

Currently, target applicants for entry to RS are FinTech companies, including start-ups, banks, financial institutions, and any other company. Now, Limited Liability Partnership (LLP) and partnership firms are also eligible.

Second cohort

Meanwhile, the central bank has announced the opening of Second Cohort under RS with ‘Cross Border Payments,’ as its theme.

In this regard, the RBI observed that India is the largest recipient of inbound remittances across the globe, accounting for 15 per cent of global share. In 2019, India received $83 billion, and in the first half year of 2020, it received $27.4 billion.

Further, the daily average turnover of OTC (over the counter) foreign exchange instruments in India is approximately $40 billion.

The RBI emphasised that the cohort is expected to spur innovations capable of recasting the cross-border payments landscape by leveraging new technologies to meet the needs of a low cost, secure, convenient and transparent system in a faster manner.

The central bank said it has decided to select ‘MSME Lending’ as the theme for the Third Cohort.

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