Why is it in the news?

• Recently, the RBI Governor called on fintech entities to establish a Self-Regulatory Organisation (SRO) in the fintech sector.
• SROs are non-governmental bodies tasked with setting and enforcing industry-specific rules and standards for transparency, fair competition, and consumer protection.

Role of an SRO

• SROs collaborate with industry stakeholders to develop and administer self-regulatory processes.
• They maintain impartial mechanisms for enforcing rules and standards, ensuring member compliance.
• SROs address issues like market integrity, conduct, data privacy, cybersecurity, and risk management.

Need for an SRO

• Ethical concerns in the fintech sector, such as high-interest rates and borrower harassment, highlight the necessity of SROs.
• SROs can help build trust among consumers, investors, and regulators by promoting responsible practices and maintaining ethical standards.

RBI’s Expectations from Fintech Players

• RBI Governor emphasizes the importance of fintech’s evolving industry best practices and adhering to data protection laws.
• Responsible business practices, transparency in pricing, and ethical conduct are encouraged.

Benefits of an SRO

• SROs offer industry expertise and serve as watchdogs against unprofessional practices.
• They promote ethical conduct and contribute to a disciplined and professional market environment.

Functions of an SRO

• SROs facilitate communication between members and regulators.
• They establish industry standards, provide training, conduct awareness programs, and manage grievance redressal and dispute resolution.

About Fintech

• Fintech refers to the use of technology to enhance and automate the delivery and utilization of financial services.
• It encompasses specialized software and algorithms utilized on computers and smartphones.

Core purpose of Fintech

• Fintech aims to improve how individuals, businesses, and companies manage their financial operations and processes.
• It enhances financial services and facilitates more efficient financial management.

Relevance of Fintech

• The COVID-19 pandemic has accelerated the adoption of fintech, reshaping the future of finance.
• Digitization of financial services and money creates opportunities for inclusive and efficient financial services and promotes economic development.
• Fintech is rapidly transforming the financial sector, blurring the boundaries between financial firms and the sector itself.

Indian Fintech Sector

• India’s fintech sector is evolving quickly, reflecting the nation’s diverse characteristics.
• The sector is experiencing significant growth and innovation, driven by digital technology adoption and changing consumer preferences.