The Government of India, in collaboration with SEBI and the Reserve Bank of India (RBI), has launched a dedicated Regulatory Sandbox for public fintech companies, aimed at fostering innovation while ensuring regulatory compliance. Announced in November 2025, the sandbox is designed to provide a controlled testing environment for listed fintech firms to pilot new financial products, services, and technologies with real users, but under close regulatory supervision. The initiative is part of India’s larger fintech roadmap to accelerate digital financial inclusion and strengthen capital market infrastructure.

Eligible public limited fintech companies will be allowed to test innovations such as blockchain-based settlement platforms, AI-driven investment advisory tools, algorithmic lending models, and tokenized securities. Participation requires approval from SEBI and/or RBI, depending on the domain, and companies must submit detailed test plans, risk management strategies, and data protection protocols. The sandbox offers temporary regulatory relaxations—including exemptions from certain reporting, disclosure, and onboarding norms—to allow flexibility and experimentation without compromising financial system integrity.

Each testing cycle will run for a maximum of six months, after which companies must submit comprehensive outcome reports for review. Based on test results, regulators may grant long-term regulatory clearances or recommend broader policy adaptations. Public fintech firms will also benefit from faster access to SEBI’s listing approvals and a streamlined compliance interface during the testing period. Analysts and startups have welcomed the move, stating that it will boost investor confidence, attract foreign capital, and accelerate India’s leadership in fintech innovation, all while maintaining high standards of market stability and consumer protection.