The Insurance Regulatory and Development Authority of India (“ IRDAI” ) has issued the FAQs on Inter-operable Regulatory Sandbox (herein referred as “FAQ ”). The FAQs are issued to provide a comprehensive overview of the Inter-operable Regulatory Sandbox (“ IoRS ”) initiative and address the common queries from potential participants.
The key highlights of the FAQ are as under:
| Queries | Explanation |
|---|---|
| What is a Regulatory Sandbox, and which regulators are involved in India? | A Regulatory Sandbox is a controlled environment where new products or services can be live tested with certain regulatory relaxations. In India, the following financial sector regulators have established regulatory sandboxes to foster innovation:
Reserve Bank of India (RBI)
Securities and Exchange Board of India (SEBI)
Insurance Regulatory and Development Authority of India (IRDAI)
– International Financial Services Centres Authority (IFSCA) |
| What is the IoRS, and how does it function? | The Inter-operable Regulatory Sandbox (IoRS) is a unified platform for testing hybrid financial products and services that span multiple regulatory domains. For the insurance sector, this means that products that combine elements of insurance and other financial services, such as banking or payments that can be tested under one framework, engaging multiple regulators like IRDAI, RBI, SEBI, and IFSCA. The IoRS fosters collaboration between multiple regulators to support cross-sectoral innovations. |
| How is the IoRS different from individual sandboxes? | The IoRS stands distinct from individual sandboxes as it supports innovations involving collaboration between multiple regulators, unlike the individual sandboxes which are governed by their respective regulators. |
| What is the role of the Principal and Associate Regulators in IoRS? | The Principal Regulator (PR) is responsible for the dominant feature of the product, while the Associate Regulator (AR) oversees additional features under their jurisdiction. The PR and ARs collaborate to ensure compliance with all relevant regulations. The dominant feature is determined based on product enhancements and regulatory relaxations sought, with decisions made on a case-by-case basis. |
| Who can participate in the IoRS, and how do they apply? | Participation is open to financial institutions, FinTech companies, RegTech providers, startups, and other innovators offering products or services relevant to the financial sectors. Entities, including foreign FinTechs, can apply by submitting a single application form to the Coordination Group at the FinTech Department of RBI via email at iors@rbi.org.in, along with the requisite sandbox fees under the Principal Regulator’s framework. |
| How is the dominant feature of a product determined? | The dominant feature is determined based on the type of enhancement to existing financial products and the number of regulatory relaxations sought. The regulator with the majority of the product’s regulatory features will act as the PR, while other regulators handling specific features will act as ARs. The decision on relaxations is made on a case-by-case basis, and the outcome is final. |
| What happens after testing in the IoRS? | After successful testing, entities can approach the Principal Regulator (PR) and Associate Regulators (ARs) for necessary authorizations and regulatory approvals before launching the product in the market. The successful exit of a product from IoRS will be officially communicated through a Press Release. |
The Standard Operating Procedure for IoRS can be accessed at the link:
https://fintech.rbi.org.in/FS_PressRelease?prid=54528&fn=2765
For any inquiries, please email at iors@rbi.org.in
Source category: IRDAI
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