The Reserve Bank of India has issued a structured proposal for a FinTech regulatory sandbox. The proposal is straight forward and follows the establishment of a working group that reported in 2018. The sandbox is to allow exploration of new and innovative technologies (which is noted to include Artificial Intelligence and Machine Learning applications) that will solve problems or bring benefits to consumers. Potential relaxation of regulations for the purposes of testing is contemplated. In particular it is noted that use of the sandbox will be encouraged where:
- there is absence of governing regulations;
- there is a need to temporarily ease regulations for enabling the proposed innovation;
The primary goal of the sandbox is described this way:
First and foremost, the RS fosters ‘learning by doing’ on all sides. Regulators obtain first-hand empirical evidence on the benefits and risks of emerging technologies and their implications, enabling them to take a considered view on the regulatory changes or new regulations that may be needed to support useful innovation, while containing the attendant risks.
The point about first-hand experience to the regulators is important, as many have noted that a lack of technological expertise at the regulatory level is an impediment to effective regulation.
Legal waivers and limits of liability are not provided.
A stated goal is innovation-enabling and innovation-responsive regulation. One senses that the global regulatory view is tending towards being very cautious about stifling the use of new technologies as a result of over regulation.