Draft frameworks for Regulatory Sandbox

India’s FinTech space is going through an evolutionary phase. A Regulatory Sandbox is a controlled environment for live testing of new technology with limited Regulations and customer exposure. The innovators, the financial service providers and the customers can conduct field tests to collect evidence on the benefits and risks of new financial innovations.

In order to support the recent innovations, major regulators RBI, SEBI and IRDA have come up with the Frameworks on Regulatory Frameworks. RBI constituted a working group and released ‘Enabling Framework for Regulatory Sandbox’ on 18th April, 2019. In a similar initiative, SEBI released Innovation Sandbox Framework on 20th May for FinTech firms and entities not regulated by SEBI including individuals and IRDA has also released draft IRDAI (Regulatory Sandbox) Regulations, 2019 on 18th May. In the latest event, SEBI released a discussion paper on ‘Regulatory Sandbox’ for financial institutions regulated by SEBI. These entities shall be granted certain facilities and flexibilities to experiment with FinTech solutions in a live environment and on real customers sans the restrictions of applicable regulations.


One of the key role of Regulatory Sandbox is to increase efficiency, manage risks and create new opportunities for consumers. Regulatory Sandbox has several other benefits:

  1. It facilitates, open and transparent communication between regulator and the sandbox entities to enable learning from each other.
  2. Increases financial inclusion by greater participation of investors as well as people raising capital or providing services.
  3. Lowers risk to customers and the financial system due to more effective supervision.
  4. Heightens potential for reduced time-to-market cycle by streamlining the authorization process and reducing uncertainty for market players.

This is a a clear signal that facilitating technological innovation is on the regulator’s agenda.

The Draft Frameworks also prescribe Eligibility Criteria, Approval procedures, stages and timelines of Sandbox process, regulatory exemptions, disclosure requirements, consumer protection etc. for Participants of the respective Sandboxes.

  • Click here to see RBI Draft sandbox Framework.
  • Click here to see IRDA Draft sandbox Framework.
  • Click here to see SEBI Draft Innovative Sandbox Framework.
  • Click here to see SEBI consultation paper on Regulatory Sandbox Framework.


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