Context:
Reserve Bank of India (RBI) releases a comprehensive framework for a Regulatory Sandbox (RS)
Regulatory Sandbox:
- Regulatory Sandbox – Live testing of new products or services in a controlled/test regulatory environment for which regulators may permit certain regulatory relaxations for testing.
- Aim – To foster responsible innovation in financial services, promote efficiency and bring benefits to consumers.
- Eligible entities – Entities having minimum net worth of ₹25 lakh as per their latest audited balance sheet.
- Includes – Money transfer services, Digital know-your customer, Financial inclusion and Cybersecurity products
- Excludes – Credit registry, Crypto currency and Credit information
- Benefits –
- Testing of product viability, enabling modifications before broader launch, thus reducing risks.
- Accelerates financial inclusion through innovations in microfinance, small savings, and digital banking.
- Limitations –
- Possible loss of flexibility and time of innovators in the sandbox process.
- Case-by-case authorizations and relaxations can involve discretional judgements.
Source: Business Standard
Previous Year Question
In the context of finance, the term ‘beta’ refers to:
[UPSC Civil Service Exam – 2023 Prelims]
(a) the process of simultaneous buying and selling of an asset from different platforms
(b) an investment strategy of a portfolio manager to balance risk versus reward
(c) a type of systemic risk that arises where perfect hedging is not possible
(d) a numeric value that measures the fluctuations of a stock to changes in the overall stock market
Answer: (d)
