Combo fin products are on the way…

Launch of Combo fin products –

Launch of Combo services such as savings accounts with insurance or an insurance product with new pension scheme benefits etc. has paved its way in its final launch. An inter-regulatory technical group (IRTG) on fintech announced the standard operating procedure for an inter-operable regulatory sandbox for hybrid products and services on Wednesday. The group was constituted under the aegis of the Financial Stability and Development Council, which includes all financial sector regulators. These financial authorities have set some ground rules for the launch of combo products by financial institutions. These products straddle across various regulators such as the Reserve Bank of India (RBI), Sebi, and those for insurance and pension along with the international finance service center.

Ground rules of combo products –

As certain ground rules are made by financial authorities, they have authorized a sandbox. This inter-operable regulatory sandbox will act as a mechanism to facilitate the testing of hybrid financial services, which falls within the regulatory ambit of more than one financial regulator.

Regulatory authorities details –

The nodal point for receiving all the applications is the fintech department of the RBI. The regulator under whose remit the ‘dominant feature’ of the product falls shall govern it as the ‘principal regulator’ (PR). The regulator/s under whose remit the other features apart from the dominant feature of the product fall shall be the ‘associate regulator’ (AR). Two sets of factors would be considered or decide the dominant feature. First, the type of enhancement to existing products like loans, deposits, capital market instruments, insurance, G-secs and pension products. Second, the number of relaxations sought by the entity for undertaking the test under the sandbox. The dominant feature shall be decided with greater weightage to the number of relaxations sought.

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