The RBI last week released a draft document "Enabling Framework for Regulatory Sandbox". Comments on the draft document are invited by the RBI until May 08, 2019. The notification can be accessed here, and the paper is available for download here. The paper describes regulatory sandbox thus: "...live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing." Discussed below are the key features of the paper. Objectives of the framework The objective of the development of the sandbox is to allow startups to test innovative models in a controlled environment. It is used to "collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and containing their risks". The testing allows fintech companies to test products and business models "subject to certain oversight". This in turn is intended to help in evidence-based policymaking. The target area of the sandbox is primarily areas where there is an absence of governing regulations, or a need for greater clarity on regulations. Providing the closed environment in these situations is intended to increase flexibility in innovation for these companies. The sandbox however does not completely erase liability from companies for the services they offer even within its limits. These issues will be handled on a case-by-case basis, and sought to be minimised by clear entry and exit frameworks. "Upfront clarity that liability for customer or business risks shall devolve on…
