Topic: Fintech Sandbox
Topic in Syllabus: Indian Economy
Recently, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed the use of regulatory sandbox (RS) to promote new, innovative products and processes in the Fintech industry.
- RS is an infrastructure that helps Fintech players to live test their products or solutions, before getting the necessary regulatory approvals for a mass launch, saving start-ups time and cost.
- It allows the regulator, the innovators, the financial service providers and the customers to conduct field tests to collect evidence on the benefits and risks of new financial innovations.
- For instance, Data analytics(a part of Fintech) is an area which insurance industry can take benefit to serve their customers as India accounts for around only 6% of insurance premium in Asia and around 2% of the global premium volume.
- The Reserve Bank of India is also planning to provide similar infrastructure in the banking sector.
- Financial technology (Fintech) is used to describe new technology that seeks to improve and automate the delivery and use of financial services.
General Insurance :
- In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general insurance business was nationalized with effect from January 1, 1973.
- 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and United India Insurance Company Ltd.
- In 1993, the Government set up a committee under the chairmanship of RN Malhotra,former Governor of RBI, to propose recommendations for reforms in the insurance sector.
- Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry.
- The IRDA was incorporated as a statutory body in April 2000.
- Insurance Regulatory Development Authority of India (IRDAI) is a regulatory body created with the aim of protecting the interests of the insurance customers.
- It regulates and sees to the development of the insurance industry while monitoring insurance-related activities.
- The key objectives of the IRDA include the promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums while ensuring the financial security of the insurance market.
Which of the following organization has decided to establish a regulatory sandbox for Fintech startups?
d) None of these