On July 20, 2022, NITI Aayog released a report on digital banks titled “ A proposal for Digital Banks in India Licensing and Regulatory Regime ’’ In the report, government’s think tank has provided template and roadmap for licensing and regulatory governance for India. NITI Aayog prepared this report on the base ofinter-ministerial consultations.

Important features of the report include

  • NITI Aayog report seeks to avoid regulatory or policy arbitrage and provide a level playing field to incumbents and competitors.
  • It studies the gaps and niches which remain underserved as well as the best practices of licensing digital banks, considering the need of supporting technology in an effective way. This move seeks to cater the requirements of banking in India.
  • It also maps prevalent business models in the digital domain and highlights challenges faced by ‘ partnership model ’ ofneo-banking.
  • The NITI Aayog report presents following recommendations.
  • Report recommends to issue a defined digital bank licence( to a given applicant). License will be confined with respect to volume/ value of customers serviced.
  • It also recommends to enlist the licensee in a regulatory sandbox framework, provided by the RBI.

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