Meet the six firms in first cohort of RBI regulatory sandbox

The Reserve Bank of India (RBI), late Thursday, announced that Mumbai-based Tap Smart Data Information Services, Bengaluru-based Naffa Innovations and Ubona Technologies, and Noida-based Eroute Technologies will join the first cohort of its Regulatory Sandbox (RS).

The maiden test phase cohort, with retail payments as its theme, comprises a total of six fintech companies, chosen from 32 applications.

The other two companies in the cohort, disclosed by the central bank in November, are Jaipur-based Natural Support Consultancy Services and New Delhi-based Nucleus Software Exports. The two entities, founded in 2005 and 1986, respectively, began product testing on November 16.

Founded in 2017, Tap Smart Data Information Services operates CityCash, a product set of near-field communication (NFC)-based prepaid card and NFC-enabled point of sale (PoS) device, to facilitate offline person-to-merchant (P2M) transactions. It commenced testing on December 14.

Naffa Innovations operates ToneTag, an offline, feature phone-based UPI payments solution for P2M transactions over “sound medium” by establishing a channel for data transfer over interactive voice response (IVR) between devices. The 2013-founded firm commenced testing on December 14.

Ubona Technologies, founded in 2007, operates a voice-based UPI payments solution that facilitates offline person-to-person (P2P) and P2M transactions using mobile phones, including feature phones. It commenced testing on December 18.

Eroute Technologies operates a UPI-based offline payments solution using SIM overlay smartcard placed on the SIM, to drive SIM tool kit (STK) menu-based user interface to facilitate P2P/P2M transactions. The 2018-founded firm commenced testing on December 21.

The testing commencements, RBI said in the November statement, was delayed due to the Covid-19 situation.

In August 2019, the central bank finalised guidelines for the RS to test innovative financial products and technologies, in a bid to help financial service providers collect evidence on the benefits and risks of new innovations in a regulated environment.

Fintech companies, including startups, banks, financial institutions and companies providing financial services, were encouraged to apply for the programme. 

On December 16, the RBI announced the second cohort under RS, with cross border payments as the theme. It will accept applications for the testing programme till February 15.

Additionally, RBI has chosen micro, small and medium enterprises (MSME) focussed lending as the theme for the third RS cohort, as per a statement on the second cohort’s announcement.

In the past couple of years, the central bank has displayed a renewed focus relating to innovation in the financial technology sector in the country.

In its monetary policy statement on development and regulatory policies dated August 6, 2020, it announced the setting up of a Reserve Bank Innovation Hub (RBIH).

Last month, RBIH received a governing council to guide and manage the promotion of innovation across the financial sector by leveraging technology.