FISME commits to support Cos’s experimentation on the regulatory sandbox for loans to MSMEs


FISME commits to support Cos’s experimentation on the regulatory sandbox for loans to MSMEs

New Delhi, October 9 (KNN) The Federation of Micro and Small and Medium Enterprises of India (FISME) has offered support to companies experimenting with innovative practices for lending to MSMEs as part of the third cohort of the regulatory sandbox proposed by the Reserve Bank of India .

Applications for the third cohort are invited to be submitted from 01 October 2021 to 14 November 2021.

To encourage innovations, RBI implemented a regulatory sandbox framework on August 13, 2019. Regulatory sandbox refers to live testing of new products or services in a controlled / regulatory environment for which regulators can or not apply certain regulatory relaxations.

The sandbox enables the regulator, innovator, financial service providers and clients to conduct field tests to gather evidence on the benefits and risks of new financial innovations while carefully monitoring and limiting the risks.

“The regulatory sandbox approach taken by the RBI for ‘loans to MSMEs’ is very welcome and we hope it will help the framework to evolve in a mature way. We are very keen to see positive results from the sandbox executives and to offer our full cooperation to the participating companies, ”said FISME President. Dr Animesh Saxena.

“Interested companies can contact us to discuss experiments with member companies,” he added.

The main benefit of the regulatory sandbox, according to the RBI, is that it promotes “learning by doing” on all sides. Among other benefits, the regulatory sandbox could lead to better outcomes for consumers through a wider range of products and services, lower costs and better access to financial services.

The Reserve Bank’s regulatory sandbox (RS) had introduced three “retail payments” cohorts; “Cross-border payments”; and “Loan to MSMEs” and a fourth cohort on “Financial Fraud Prevention and Mitigation” is added to the list when monetary policy is announced.

The RBI relaxed the eligibility standards for sandboxed applications in December last year by reducing the existing INR 25 lakh net worth requirement to INR 10 lakh, also including partner companies and limited liability companies (LLP) to participate in SR.

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