RBI Encourages Fintech Self-Regulatory Organizations (SROs) for Ethical Practices

September 9, 2023

Reserve Bank of India (RBI) Governor Shaktikanta Das has called upon fintech entities to establish Self-Regulatory Organizations (SROs). He emphasizes the need for SROs in the fintech sector to address issues related to market integrity, data privacy, cybersecurity, and risk management.

Such organizations can enhance trust among consumers, investors, and regulators by promoting responsible practices and ethical standards. The RBI expects fintech firms to adopt industry best practices, privacy norms, and ethical business conduct, suggesting that SROs be voluntarily established by the fintech industry itself.

What is the role of a Self-Regulatory Organization (SRO) in an industry, particularly in fintech?

SROs serve as non-governmental entities responsible for creating and enforcing industry-specific codes of conduct. They promote transparency, fair competition, and consumer protection while acting as intermediaries between regulators and market participants.

How do SROs ensure compliance with industry standards?

SROs use impartial mechanisms to administer self-regulatory processes and ensure members operate in a disciplined environment. They act as intermediaries between regulators and industry participants, helping to maintain ethical standards and conduct.

What benefits do SROs bring to their industry and member organizations?

SROs are industry experts, fostering ethical business conduct and confidence in the ecosystem. They serve as watchdogs against unprofessional practices.

What are the key functions of a recognized SRO in its industry?

An SRO facilitates communication between its members and regulators, establishes industry benchmarks, standards, and conducts training and awareness programs. It also manages grievance redressal and dispute resolution frameworks.

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