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SEBI chief on how fintechs can prepare for a crackdown 

Sep 21, 2022

Synopsis
The markets regulator Securities and Exchange Board of India (SEBI)might have been late to the party when it comes to startups in the recent past but Madhabi Puri Buch, its chairperson said that it is now planning to narrow down the regulatory gap in the startup ecosystem.

The markets regulator Securities and Exchange Board of India (SEBI) might have been late to the party when it comes to startups in the recent past but Madhabi Puri Buch, its chairperson said that it is now planning to narrow down the regulatory gap in the startup ecosystem.

Speaking at the Global Fintech Fest in Mumbai, Buch said that by construct, a regulatory gap is bound to exist.

"If startups are building something completely new, then it has not even entered the heads of those in the regulatory body. But, when we finally show up, what is it that fintech innovators should have kept in mind to avoid crackdown?” she said.

Buch said that any business model that relies on a black box and that cannot be audited or validated will not be permitted. She also said since data is public infrastructure, any attempt by any private party to own them cannot be tolerated.

Startups should focus on credible data. Buch said that anonymity in the financial world is an absolute no-no and that should be the first guiding principle for businesses. The regulator will be supportive if a fintech’s business model facilitates financial inclusion, she said.

It is the regulator's principal job is to ensure investors make informed decisions. “If your business model is woven around a black box, which is not open to sunlight or not capable of being audited or validated, it cannot be permitted,” she said.

[The Economic Times]

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