The RBI has issued a preliminary framework outlining the criteria for recognizing Self-Regulatory Organizations (SROs) within the FinTech sector. This framework defines the characteristics, functions, and governance standards for FinTech SROs. FinTechs play a transformative role in financial services by streamlining processes, improving accessibility, and reducing costs. Striking a balance between fostering industry innovation and addressing regulatory concerns to safeguard consumers and manage risks is vital, according to the RBI.  

The RBI expressed a preference for self-regulation in the FinTech sector to achieve a balanced approach. According to the draft framework, the strength of the FinTech Self-Regulatory Organization (SRO-FT) lies in its membership, ensuring genuine representation of the FinTech industry. By establishing comprehensive membership agreements across a diverse range of industry participants, the SRO-FT aims to attain legitimacy and credibility. It is not only responsible for formulating baseline standards and conduct codes but also for actively overseeing and enforcing them. The industry should recognize and acknowledge the SRO-FT as the primary authority for establishing market standards, defining conduct rules, and promoting voluntary adoption of a shared framework among its members, as per the RBI's guidelines.

The framework emphasizes that the FinTech Self-Regulatory Organization (SRO-FT) should be oriented towards development, actively fostering the growth and progression of the industry. This entails sharing specialized knowledge, providing guidance, contributing to skill enhancement through training initiatives, and setting minimum eligibility criteria for its members. Additionally, the SRO-FT should be viewed by its members as a credible mediator in disputes, necessitating a transparent and fair resolution mechanism that builds trust within the FinTech sector. Efficiently managing conflicts and grievances would contribute to a more stable and cohesive FinTech environment. A proactive SRO-FT should have the ability to encourage its members to align with regulatory priorities.