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    Three entities complete test phase in the fourth cohort of RBI’s Regulatory Sandbox

    The RBI has completed the “test phase” for 3 of the 6 products that were chosen as the Fourth Cohort of the Regulatory Sandbox (RS) for ‘Prevention and Mitigation of Financial Frauds’. Having exited the Regulatory Sandbox, the products can be used by Regulated Entities to prevent fraud.

    Here are the products and the enterprises that created them in partnership with Financial institutions:

    • Bahwan Cybertek Private Limited (Financial Institution- IDBI Bank): ‘rt360 Real Time Monitoring System’ can assist banks in monitoring and analysing transactions on a real-time/ near real-time basis and generate alerts for proactive follow-up and action.
    • napID Cybersec Private Limited (Partner Financial Institution- City Union Bank): The napID Fraud Filter Layer locks the login form and payment form and unlocks them only for the authorised users using their credentials via the napID Pre-Authenticator app, making compromised credentials/ cards useless in the hands of fraudsters.
    • Trusting Social Private Limited (Partner Financial Institution – Protium Finance Limited and Finnovation Tech Solutions Private Limited): ‘Trusting Social Credit Insight (CI)’ uses mobile subscriber data to risk-rank the active subscriber base and assesses the risk of default of a loan applicant. It also helps check creditworthiness for the new-to-credit segment.

    The RBI has not indicated the progress of the other 3 products in the cohort – the products created by enStage Software Private Limited and its collaboration with HSBC and Crediwatch Information Analytics Private Limited.

    What is the regulatory sandbox?

    The RBI introduced the Regulatory Sandbox Framework to “collect evidence on the benefits and risks of new financial innovations while carefully monitoring and containing their risks”. The testing allows fintech companies to test products and business models while “subject to certain oversight”.

    In each cohort, the products undergo phases—preliminary screening, application assessment and shortlisting, formulation of test design and integration phase, testing phase and finally, the evaluation phase, after which it is made available to companies.

    Previous Cohorts

    So far, the RBI has released products from four cohorts, aside from the one for Prevention and Mitigation of Financial Fraud.’ The first 3 cohorts were:

    • First cohort: It carried the theme of retail payments in which 32 applications were received by the RBI. Out of these applications, it selected only six applicants for the test phase, according to a report in the Hindu Business Line.
    • Second cohort: It dealt with cross-border payments as per an RBI notification. The bank received 27 applications from 26 entities from December 21, 2020, to February 15, 2021, the Hindu Business Line added. A total of eight entities were selected for the test phase of the second cohort.
    • Third cohort: The focus of the third cohort revolved around MSME (Micro, Small, and Medium Enterprises) Lending, as per the RBI.

    The fifth cohort, themed “neutral,” is still running.

    In its updates for the ‘Framework for Regulatory Sandbox’, the RBI stated that it was looking for innovative products in the space of retail payments, money transfer services, marketplace lending, digital KYC and digital identification services, financial advisory and wealth management services, smart contracts, financial inclusion products, cyber security products and Regulatory Technology (regtech) and Supervisory technology (suptech).

    It also called for innovative technology such as mobile apps for payments, digital identity, data analytics, application program interface (APIs) services, blockchain applications, and artificial intelligence and machine learning applications.

    The RBI has also mentioned that applications for the Fourth Cohort on ‘Prevention and Mitigation of Financial Frauds’ are also open for the “On Tap application.”

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    The post Three entities complete test phase in the fourth cohort of RBI’s Regulatory Sandbox appeared first on MEDIANAMA.

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