SRO for fintechs will bring uniformity, help in compliance adherence, says DLAI CEO

DLAI CEO discusses benefits of proposed SRO-FT for fintech industry, emphasizing standardization, transparency, and investor confidence.

A Self-Regulatory Organisation for Fintechs (SRO-FT), as has been proposed by the RBI, would bring standardisation and help in distinguishing serious players from the rest of the lot, said Jatinder Handoo, CEO, Digital Lenders Association of India (DLAI).

“At present , the Indian fintech industry is diverse in nature, hence the priorities and their representations are also divergent,” Mr. Handoo said in an e-mail interview.

“For members of an SRO-FT, the single biggest benefit would be a credible platform to take forward genuine, common voice of fintech players to appropriate offices and contribute positively in the regulatory and policy making dialogue which affects the entire sector,” he said.

“Additionally, it will bring a common minimum standardisation in processes like addressing customer grievances or common Leading Service Providers (LSP) agreements and forging sectoral partnerships,” he added.

“SRO-FT will act as a repository for sectoral data and it will release credible data backed reports regularly, it will bring more transparency and openness to the system and hence, will also reinforce investors’ and policy makers’ confidence and interest,” he further said.

This comes amid a high decibel campaign by a section of the fintech industry contending that the Reserve Bank of India (RBI) as regulator is ‘stifling innovation’ by stressing on compliances. The RBI had recently barred Paytm Payments Bank Ltd. from accepting any further deposits and ordering the closure of its wallet, nodal and other accounts.

The RBI, whose primary tasks include preserving financial stability by ensuring that regulated entities (REs) follow the prescribed regulations, has already set into motion steps for the establishment of a framework for a self-regulatory organisation (SRO) for fintech companies with an objective to set standards for the industry, aid in oversight and enforcement, and provide grievance redressal and dispute resolution.