The central bank will issue guidelines for a regulatory sandbox in the next two months to promote innovation in financial technology (fintech), RBI governor Shaktikanta Das said on Monday.

A regulatory sandbox is a framework set up by a regulator that allows fintech start-ups to conduct live experiments in a controlled environment under supervision.

In November 2017, the RBI’s working group on fintech and digital banking had suggested the introduction of a regulatory sandbox/innovation hub within a well-defined space and duration to experiment with fintech solutions, where the consequences of failure can be contained and the reasons for failure analysed.

Das said fintech can reduce costs and improve the access and quality of financial services. “We have to strike a subtle balance between effectively utilising fintech while minimising its systemic impacts,” he said at a Niti Aayog event here.

Meanwhile, Das will be meeting the heads of seven payments banks later this week to understand the issues faced by them. “I have started a process of active engagement with stakeholders and players who are supposed to play these kinds of roles. I met the (heads of) small finance banks last week. Later part of this week, I am meeting the payments banks also.”

Seven payments banks have started operations after the first set of licences were issued in 2015.

Das-Jaitley meet

The RBI governor met finance minister Arun Jaitley on Monday and is believed to have discussed the current economic situation ahead of the first bi-monthly monetary policy for 2019-20.

“It was a courtesy meeting. There is a tradition of the RBI governor meeting the finance minister before the monetary policy, so it is part of that,” Das told reporters.