Page 8 - Banking Finance April 2019

RBI CORNER

RESERVE BANK

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RBI plans norms for sandbox approach for fintech firms RBI notifies Interest sub-
RBI will issue guidelines soon for fintech companies to test their new products vention for crop loans
on a small group of users before scaling up. RBI gover-
nor Shaktikanta Das said the "regulatory sandbox" will RBI has notified the norms for banks
help fintech companies launch innovative products at a with regards to
lower cost and in less time. The sandbox will enable two per cent
interest sub-
fintech companies to conduct live or virtual testing of
vention or sub-
their new products and services.
sidy for short-
These companies will also be able to test the viability of term crop loans during 2018-19 and
the product without a wider and expensive rollout. "The 2019-20. The Centre has already ap-
Reserve Bank's working group on fintech and digital proved the scheme. To provide short-
banking…suggested the introduction of a 'regulatory sandbox/innovation hub' term crop loans up to Rs 3 lakh to
within a well-defined space and duration to experiment with fintech solutions, farmers at an interest rate of 7 per
where the consequences of failure can be contained and reasons for failure cent, the RBI said it has been de-
analysed," Das said. cided to offer interest subvention of
In order to protect customers and safeguard the interests of all stakeholders, 2 per cent per annum to lending in-
and streamline their influence on the financial system, the governor stressed stitutions.
on the need for a regulatory and supervisory framework for fintech firms. "This interest subvention of 2 per cent
will be calculated on the crop loan
RBI Governor lauds role of credit rating agencies amount from the date of its disburse-

Reserve Bank Governor Shaktikanta Das said credit rating agencies play a criti- ment/drawal up to the date of actual
cal role in the stability and efficient functioning of repayment of the crop loan by the
the financial sector. Das held a meeting with top farmer or up to the due date of the
officials of credit rating agencies as part of stake- loan fixed by the banks whichever is
holder consultation exercise. earlier, subject to a maximum period
"Credit Rating Agencies (CRAs) have a critical role of one year," it said in a notification.
in the financial sector, its stability and efficient Under the scheme, an additional 2
functioning. Held a meeting with MD/CEOs of per cent interest subvention is pro-
CRAs as part of stakeholder consultation," he tweeted. Domestic credit rating vided to farmers repaying loans
agencies include Care, Icra and India Ratings and Research. promptly. For such farmers, the effec-
CRAs have off late come under criticism for failing to timely identify the stressed tive rate of short-term crop loans
assets of IL&FS, which saw a series of defaults in loan repayments. works out to be 4 per cent per annum.

8 | 2019 | APRIL | BANKING FINANCE