Fintech SRO Race: FCC vs DLAI for RBI Recognition
Why in the news
Two industry groups are racing to become a fintech self-regulatory organisation (SRO) recognised by the RBI.
Key facts
- Fintech Convergence Council (FCC): formed a fresh entity to seek SRO recognition.
- Digital Lenders’ Association of India (DLAI): its rival for the second SRO place.
- FACE (Fintech Association for Consumer Empowerment) already represents fintech firms.
- RBI wants two SROs, like the microfinance sector.
SRO role and requirements (RBI, May 2024 framework)
| Role | Requirement |
|---|---|
| Supervise innovation inside regulatory limits | Board that is independent, with strong leadership |
| Encourage legal compliance alongside innovation | Key managerial staff who pass RBI fit-and-proper tests |
| Apply light-touch self-governance | Members drawn from several fintech segments such as lending and digital currency; unregulated fintechs in majority |
Challenges
- Existing bodies may miss RBI’s criteria, so restructuring or new entities are needed.
- Business models in lending, payments, digital assets and neo-banking differ, making a single SRO hard.
Way forward
- RBI will assess applications for compliance before granting status.
Exam angle
- SRO framework: RBI, May 2024.
- Contenders: FCC, DLAI.