Context:

The International Financial Services Centres Authority (IFSCA) introduced a framework for regulatory sandbox enabling entities regulated by the watchdog to test their new solutions in a live environment and on a limited set of real customers with necessary safeguards.

The framework

• Under this sandbox framework, entities operating in the capital market, banking, insurance, and financial services space shall be granted certain facilities and flexibilities to experiment with innovative financial technology (fintech) solutions in a live environment with a limited set of real customers for a limited timeframe.
• Eligibility: All entities (regulated as well as unregulated) operating in the capital market, banking, insurance, and pension sectors as well as individuals and startups from India and FATF compliant jurisdictions, shall be eligible for participation in the Regulatory Sandbox.
• These features shall be fortified with necessary safeguards for investor protection and risk mitigation.
• The Innovation Sandbox will be managed and facilitated by the Market Infrastructure Institutions operating within the IFSC.
• The regulatory sandbox will operate within the IFSC located at GIFT City.

About IFSCA

• The IFSCA has its head office in Gandhinagar.
  • The first IFSC in the country has been set up at the Gujarat International Finance Tec-City (GIFT) in Gandhinagar.
• It is a unified authority for regulating all financial activities at the IFSCs in the country.
• IFSCA, with an objective to develop a world-class fintech hub at the IFSC located at GIFTCity in Gandhinagar (Gujarat), endeavours to encourage the promotion of fintech initiatives across the spectrum of banking, insurance, securities and fund management.