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RBI will allow companies in MSME lending to live test regulations

The first two cohorts under the RBI’s sandbox pertained to regulations on other issues like retail payments.

The Third Cohort under the Regulatory Sandbox (RS) of the Reserve Bank of India (RBI) will start accepting applications from October 1, 2021, RBI said in a statement. The focus of the Third Cohort will revolve around MSME (Micro, Small, and Medium Enterprises) Lending, the RBI had revealed in December last year. The last date for sending applications is November 14, 2021. The Indian central bank had also toned down eligibility norms for applications under sandbox by reducing the net worth requirement from Rs. 25 lakh to Rs. 10 lakh back while releasing the theme for the third cohort.   It is well known that India's bureaucratic hurdles are baked into its regulatory environment. Stakeholders from the trade and commerce industry believe red tape deters innovation; it is what the regulatory sandbox attempts to address with its relaxations. The sandbox is like a Special Economic Zone (SEZ) for conducting financial experiments. If successful, the scheme could produce an increased range of products and services, reduce costs, and improve access to financial services. What is the Regulatory Sandbox?  Regulatory sandbox involves live testing of new products or services in a controlled environment in which participating entities can take advantage of relaxed regulatory requirements, Moneycontrol explained. “The sandbox allows regulators, innovators, financial services providers and customers to conduct field tests to collect evidence on benefits and risks of new financial innovations while carefully monitoring and containing risks,” the business website elaborated in its report.  The regulatory sandbox framework was rolled out by the RBI…

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