RBI Opens Fifth Regulatory Sandbox Cohort, Tests Blockchain Financing Solution for MSMEs
SDG 8: Decent Work and Economic Growth
SDG 9: Industry, Innovation, and Infrastructure
Institutions: Ministry of Finance
The Reserve Bank of India has launched the Fifth Cohort of its Regulatory Sandbox under a theme-neutral approach, allowing innovations across diverse financial technologies to be tested in a controlled environment. Of the twenty-two applications received, five were admitted into the ‘Test Phase’.
Among these, a product developed by Indian Banks’ Digital Infrastructure Company (IBDIC) Private Limited, in collaboration with ICICI Bank, HDFC Bank, Yes Bank, and Aditya Birla Capital Ltd., was found viable within defined boundary conditions. The solution is a blockchain-based deep-tier financing platform that enables lower-tier MSMEs in supply chains to access affordable credit. It works by tokenizing invoices raised by Tier-1 suppliers, which lenders can then fund electronically, improving liquidity access for smaller enterprises.
Following successful testing, the product may be considered for adoption by regulated entities, subject to compliance with regulatory requirements. The RBI has also announced that applications to the Regulatory Sandbox are now accepted on an ‘On-Tap’ basis through the PRAVAAH portal, enabling continuous innovation beyond predefined cohorts.
Relevant question for policy stakeholders: What measures can enhance the effectiveness and scalability of the Regulatory Sandbox in fostering responsible financial innovation while safeguarding consumer and systemic stability?
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