In a significant shift toward fostering continuous innovation in India’s rapidly evolving financial technology landscape, the Reserve Bank of India (RBI) has proposed an expansion of its Regulatory Sandbox framework, introducing a ‘Theme Neutral’ On-Tap application model that allows fintech innovators to submit testing proposals at any time of the year.
Launched in 2019, the RBI’s Regulatory Sandbox (RS) has traditionally operated through thematic cohorts, with focused rounds on areas such as retail payments, cross-border remittances, MSME lending, and fraud prevention. However, the latest initiative removes those thematic boundaries, enabling fintech firms to trial new products and services on a rolling basis.
“This ‘On Tap’ model will allow ongoing experimentation, helping fintechs stay agile while operating under regulatory oversight,” said Yogita Dand, a Certified Financial Planner and mutual fund distributor.
A Regulatory Boost for Agile Innovation
This new approach builds on the RBI’s fifth cohort, which was launched in October 2023 under a theme-neutral label. Of the 22 applications received, five remain under active testing, with the rest in various stages of evaluation or exit.
The On-Tap model means that startups and financial technology companies no longer need to wait for specific themes or application windows. The flexibility empowers innovators to align product testing with market demands, evolving technologies, or emerging consumer pain points.
“With the Sandbox now open year-round, the RBI is lowering entry barriers and enabling faster go-to-market strategies for fintechs,” said Prashant Mishra, Founder & CEO of Agnam Advisors.
From AI to Financial Inclusion: What Can Be Tested?
While the sandbox is now theme-neutral, the RBI continues to provide illustrative focus areas to guide applicants. These include:
- Digital lending and AI-driven credit scoring
- Blockchain, smart contracts, and tokenisation
- e-KYC and financial inclusion tools
- Climate risk mitigation and sustainable finance
- Accessibility solutions for divyangjan (persons with disabilities)
- Grievance redressal innovations
This expansive scope aligns with the RBI’s dual objectives of promoting financial innovation while maintaining consumer protection, risk management, and regulatory compliance.
Results from Past Cohorts
The RBI’s sandbox has seen a promising track record:
- Retail Payments Cohort: 32 applications, 6 shortlisted, all 6 exited successfully
- Cross-Border Payments: 27 applications, 8 shortlisted, 4 successful exits
- MSME Lending: 22 applications, 8 shortlisted, 5 exited
- Fraud Prevention: 9 applications, 6 shortlisted, 3 exited
Each cohort has contributed learnings to refine regulatory support and shape the sandbox into a more inclusive testing ground for fintechs.
The Road Ahead: A More Inclusive Fintech Ecosystem
As the sandbox evolves into a continuous-entry model, the RBI aims to broaden access, encouraging participation from startups, established firms, and social impact innovators alike. The move is expected to bring fresh momentum to India’s digital financial ecosystem, already one of the fastest-growing in the world.
“This marks a pivotal step toward a more inclusive and dynamic regulatory environment for India’s fintech sector,” said Mishra. “It encourages responsible experimentation while ensuring that consumer safety and financial stability are not compromised.”
With the fifth cohort expected to conclude by May 2025, the On-Tap sandbox opens the door for an uninterrupted pipeline of innovation—ensuring that India remains a hub for fintech creativity and resilience.