‘IFSCA releases framework for regulatory sandbox’

The International Financial Services Centres Authority (IFSCA) introduced a framework for regulatory sandbox enabling entities regulated by the watchdog to test their new solutions in a live environment and on a limited set of real customers with necessary safeguards.

• What is in the framework?
• Under this sandbox framework, entities operating in the capital market, banking, insurance and financial services space shall be granted certain facilities and flexibilities to experiment with innovative financial technology (fintech) solutions in a live environment with a limited set of real customers for a limited timeframe.
• Eligibility: All entities (regulated as well as unregulated) operating in the capital market, banking, insurance and pension sectors as well as individuals and startups from India and FATF compliant jurisdictions, shall be eligible for participation in the Regulatory Sandbox.
• These features shall be fortified with necessary safeguards for investor protection and risk mitigation.
• The regulatory sandbox will operate within the IFSC located at GIFT City.

What is Gujarat International Finance Tec-City (GIFT City)?

• GIFT City is being developed as a global financial and IT Services hub, a first of its kind in India, designed to be at par or above with globally benchmarked financial centres.
• It is a central business hub with state-of-the-art infrastructure and first of its kind operational smart city in India.
• GIFT City is home to domestic and international, financial services and IT/ ITES sectors.
• GIFT’s Master Plan facilitates Multi Services Special Economic Zone (SEZ) with International Financial Services Centre (IFSC) status, Domestic Finance Centre and the associated Social infrastructure.
• The purpose of setting up the GIFT City is to develop a world-class smart city that becomes a global financial hub with the development of an IFSC.

Innovation sandbox

• As an additional step towards creating an innovation-centric ecosystem in the IFSC, IFSCA has proposed the creation of an “Innovation Sandbox”.
• It will be a testing environment where FinTech firms can test their solutions in isolation from the live market, based on market related data made available by the Market Infrastructure Institutions (MIIs) operating in the IFSC.
• The Innovation Sandbox will be managed and facilitated by the MIIs operating within the IFSC.