According to RBI, financial products and service providers whose business models, activities and functions fall under the jurisdiction of more than one financial sector regulator will be considered for the IoRS audit. RBI’s FinTech department acts as a hub for receiving applications under IoRS and is designated as the “Coordination Group (CG)” for IoRS.

The IRTG was formed under the auspices of the Financial Stability and Development Council (FSDC-SC) sub-committee for inter-regulatory coordination between financial sector regulators on FinTech-related issues, including IoRS.

“The request for IoRS is done on an on-demand basis. The framework of the regulatory authority that has jurisdiction over the “dominant feature” of the product will regulate it as the “Principal Regulator (PR)”. The regulatory authority responsible for the characteristics other than the dominant characteristic of the product is the Associate Regulator (AR).

The RBI said two sets of factors would be considered or decided on the dominant trait. First, the nature of the improvement to existing products such as loans, deposits, capital markets instruments, insurance, G-sec instruments, and pension products, and second, the number of relaxations the company is requesting to conduct the test under IoRS. “The dominant feature will be decided with greater weighting of the number of targeted easing,” it said.

The relaxation, if warranted, will be reviewed by the PR or AR on a case-by-case basis and a relevant decision will be binding and final,” RBI said.

Based on the dominant characteristics of the product, the eligibility criteria and asset criteria applicable to the RS of the relevant Regulatory Authority (PR) will be applicable to the applicant company for participation in the IoRS, it said.

“Based on the minimum selection criteria of the regulator whose sphere of competence falls within the dominant feature of the product, the Coordination Group (CG) (FinTech, RBI) conducts a preliminary review of the application and forwards it to the relevant PR and AR (s) in their The area of ​​responsibility is innovation,” according to RBI.

To keep the IoRS process simple and non-disruptive, a detailed review of the application is performed by the PR based on its own framework. The PR will coordinate with AR(s) on the features of the product that falls under their purview, it said.

If SEBI is the AR, since the provisions of the SEBI Act only allow SEBI-registered companies to participate in their RS, the unregistered applicant may enter into a letter of intent or other agreement with a SEBI-registered company to participate in IoRS.

“The applications from Indian FinTechs with global ambitions and foreign FinTechs looking to enter India will be forwarded to IFSCA to advance the proposals as IFSCA will be the PR for all such applications,” RBI said.

The PR reserves the right of admissibility of the hybrid product, solution and innovation according to its RS framework and communicates accordingly to the applicant. The corresponding decision should also be communicated to the CG and IRTG on FinTech for information, according to the RBI.

“AR will provide concrete inputs, impose requirements on aspects falling within its area of ​​responsibility, parameters to be checked, boundary conditions, risks to be monitored, etc. The AR will provide inputs no earlier than but no later than 30 days after receiving notice from the PR,” it said.

The test design is finalized by the PR in consultation with the AR.

Any alignment issues between PR and AR to achieve common views on the regulatory treatment of innovative products, services and business models will be discussed and resolved in the IRTG on FinTech before live testing under IoRS is initiated. The IRTG on FinTech will monitor the progress of products tested under IoRS in its subsequent sessions, RBI said.

Upon successful exit from the IoRS, the company will approach the PR and AR to obtain approval and request a regulatory exemption before launching the product. The decision of the respective supervisory authority is binding for the company.