The Reserve Bank of India has established a fintech department to promote innovation and identify and address challenges and opportunities in the new-age sector. Ajay Kumar Choudhary, the central bank executive director, will lead the department.
The department, which would report to the RBI’s centralized administration division, will also deal with inter-regulatory and international coordination on fintech. It will also serve as a platform for future research on the topic, which will improve policy responses.
The majority of fintech startups began as unregulated businesses. A meeting of the RBI’s senior management committee in June 2018 resulted in establishing a fintech unit under the regulatory department. The Reserve Bank of India (RBI) published a framework for a regulatory sandbox in 2019 that aims ‘to provide a structured avenue for the regulator to engage with the ecosystem and develop innovation-enabling or innovation-responsive regulations.’
The RBI committed to promoting innovation to lower the cost of financial services and increase financial inclusion. The section was relocated to the department of payment and settlement systems in July 2020, as most fintech operations at the time were in the payments sector.
“To give further focus to the area and facilitate innovation in the fintech sector in keeping pace with the dynamically changing financial landscape, it was decided to set up a fintech department in the bank. With the formation of the new department from January 04, 2022, the erstwhile fintech division under the payments department has been subsumed into it,” the RBI said in a circular.
“Accordingly, all matters related to the facilitation of constructive innovations and incubations in the Fintech sector, which may have wider implications for the financial sector/markets and falling under the purview of the bank, will sector/markets the fintech department,” the circular said.