RBI Recognises Unified Fintech Forum as SRO and Warns Fintechs Against Regulatory Gaps

The Reserve Bank of India (RBI) has recognised the Unified Fintech Forum (UFF) as the second self regulatory organisation (SRO) in the fintech sector. Governor Sanjay Malhotra announced the recognition during a keynote address at the Global Fintech Fest in Mumbai on September 10, 2026. The UFF is the rebranded Digital Lenders Association of India (DLAI) and reports having over 120 members including payment gateways, non banking financial companies, and both regulated and unregulated fintechs.

During his address, Governor Malhotra cautioned fintech companies against building business models that exploit gaps between regulatory categories. He criticized the strategy of scaling first and seeking clarity or forgiveness later, noting that firms attempting to outrun the rules will eventually find that the rules catch up at a higher cost to the firm and consumer trust. He suggested that the RBI's regulatory sandbox and pilot mechanisms are the intended alternatives for innovators to test assumptions under supervision.

Malhotra also urged the industry to treat data as a fiduciary responsibility rather than a business asset. He stated that data should be collected for a clear purpose, used strictly within given consent, and protected with the same care as a firm's own sensitive information. He cited the account aggregator framework as the formalisation of this principle.

Regarding the scale of operations, Malhotra noted that while proportionate regulation should not burden early stage innovation, firms that grow to a point where they could meaningfully affect the financial system carry a responsibility beyond their balance sheet. He described this obligation as being too significant to be careless, emphasizing that cybersecurity, business continuity, and operational resilience are necessary costs of scale.

Additionally, Malhotra clarified that the RBI's model risk management document is guidance rather than regulation. He highlighted the RBI's efforts to anticipate technology through the FREE AI committee recommendations, a forthcoming AI governance framework, and the newly constituted Quantum Secure and Adaptive Financial Ecosystem (Q SAFE) committee.