पाठशाला Pathshala · नियम Niyam, Law and compliance · Lesson 29 · Scale

Engaging regulators and policy before they engage you

Most rules that will shape your market are published as drafts before they bind anyone. Build the habit of reading them, the evidence to answer them and the relationships that make the answer count.

Pathshala, The Founder Library · 11 October 2026 · 6 min read

Rashtrapati Bhavan in New Delhi reflected in a still pond at sunset. — Photograph: Yogendra Singh · Pexels

A fintech founder learns from a customer that new draft directions would make the company’s onboarding flow non-compliant. The draft was published six weeks ago. The comment window closed nine days ago. Three competitors and an industry body filed responses; the founder’s company, the one with the data on how customers actually use the flow, said nothing. The final rule will be written without it.

Indian regulation is far more consultative than founders assume. Ministries publish draft laws and rules; SEBI, the Reserve Bank and other regulators publish consultation papers and draft directions with a date by which comments are due. This lesson explains where those drafts appear, how to answer one so it is read, how much time a response really needs, the channels that exist outside any consultation, and what engagement must never become. It closes with a register a company can run every week. Policies and examples were read on 11 October 2026.

Where rules are drafted in public

Ministries. The Pre-Legislative Consultation Policy, formulated by the Committee of Secretaries and circulated in February 2014, asks departments to keep draft legislation and its key details in the public domain for a minimum of thirty days, with an explanatory note setting out the key provisions in simple language, and to place a summary of the feedback received on their website. It applies before a legislative proposal goes to the Cabinet, and the Law Ministry is to check that consultation was done before vetting.

SEBI. The securities regulator publishes consultation papers on its Reports for Public Comments page, which listed 558 of them when read, at least five in September 2026 alone, each with a link for submitting comments. The Reserve Bank issues draft directions for comment; on 10 June 2026, for example, it published eleven draft amendment directions on control and assurance functions across banks, NBFCs and other regulated entities, with comments due on or before 9 July 2026 through its Connect 2 Regulate section or by email. Other regulators publish drafts in their own formats and places. The [sector licences lesson](/library/sector-licences-rbi-sebi-irdai-fssai) shows which regulator a business answers to; that is the list to watch.

A response that gets read

A busy consultation can draw a large number of responses. The ones worth writing share five features. They identify the respondent in one line: what the company does, how many customers it serves, why it has standing. They cite the paragraph, by number, rather than the theme. They state the problem with evidence: the share of customers who would be excluded, the cost of compliance per account, the time an integration takes, from the company’s own data. They offer alternative drafting, in the regulator’s own style, that achieves the stated objective with less harm. And they propose a transition: how long the change needs and why. A response that complains without data or asks for an exemption for one business model is noise.

Microphones and monitors set out along an empty wooden conference table. — A consultation is a hearing held in writing. The responses that move a draft bring evidence and drafting, not complaint. Photograph: Werner Pfennig · Pexels

A worked shape, for a hypothetical draft that would require an in-person verification step for every new account. Page one: a lending company serving 2.4 lakh borrowers, 70 per cent of them outside the top eight cities, comments on paragraph 4.2. Page one continued: in the company’s data, 38 per cent of applicants who are sent to a branch for a physical step do not complete it, against 6 per cent who complete a video step; fraud rates in the two groups over twelve months differ by less than a tenth of a percentage point. Page two: proposed drafting that permits a video-based step meeting stated standards, with the in-person step kept for accounts above a value threshold. Page two continued: a request for six months to implement, with the reason. Annex: the method behind the numbers. The numbers here are invented for illustration; yours must come from your own records and survive a request for the underlying data. That response is two pages and an annex, and it is the one a drafting officer can use.

Write to the regulator’s objective, not yours. A draft that tightens customer verification is answered by a better way to verify customers, not by an argument that verification is costly. Where the interest is shared across an industry, file through the association as well as alone: the association carries weight, and the company’s own response carries the evidence. Then read the summary of feedback when it appears; it tells you how the regulator weighed what it heard.

The clock on a consultation

The usual reason good responses are not filed is time. A thirty-day window opens on the day of publication, not the day a founder hears of it. Pulling data, writing, getting the lawyer and the founder to agree, and aligning with an industry body take weeks. Move the sliders: a monthly scan of regulators’ websites leaves a company, on average, half the window, and a response that needs three weeks of evidence then misses it.

The lesson of the figure is that the lag is the variable a company controls cheaply. A weekly scan, a named owner and a pre-written template cut the lag to days; an evidence pack refreshed each quarter cuts the time to gather data. Neither costs much. Both decide whether the company is in the room.

Relationships before problems

Consultations are one channel. Regulators have built others for exactly the founders who need them. The Reserve Bank’s Enabling Framework for Regulatory Sandbox, updated on 28 February 2024, admits fintech companies, banks and other entities incorporated or registered in India with a minimum net worth of ₹10 lakh to test products in cohorts that may be thematic or theme-neutral, with on-tap applications for closed themes, a testing phase of up to five months and a cohort that should ordinarily finish within nine months. It excludes crypto asset services, credit information services and chain marketing, among others, and grants no legal waivers: data protection, KYC and anti-money-laundering obligations still apply. The Reserve Bank’s Connect 2 Regulate goes further, inviting the public, academia and other stakeholders to send ideas, case studies and concept notes on topics it announces, from specific drafts to open-ended regulatory questions.

Use these channels when there is nothing to ask for. A company that has explained its model to the relevant department in a short meeting, sent a concept note on a question the regulator is studying, or tested a product in a sandbox has a record. When a draft arrives that affects it, or a complaint about it reaches the regulator, the conversation starts from that record, not from a notice. The [regulatory arbitrage lesson](/library/regulatory-arbitrage-ideas-expiry-date) explains why any business built on a gap in the rules should be doing this from its first year.

The day a regulator first hears your company’s name should not be the day it reads a complaint about it.

What engagement is not

Engagement is the provision of evidence and argument in the open. It is never a gift, a favour, an offer of employment to an official or a relative, or a request to treat one company differently from its competitors. Keep a log of every meeting with an official: date, attendees, purpose, what was said and what was sent afterwards. Say nothing in private that the company would not put in a written response. Do not describe a meeting publicly, or to investors, as approval of anything. And never let a consultant or an association do on the company’s behalf what the company would not do itself; the company carries the consequence either way.

The regulatory register

Name one person, a founder until there is a general counsel, as owner. Every Monday, scan the consultation and press release pages of each regulator and ministry the company answers to, and add anything relevant to a one-page register: the draft, the paragraph that matters, the comment deadline, the owner and the decision to respond, join an industry response or let it pass. Keep a standing evidence pack, refreshed quarterly, with the numbers regulators ask for most: customers served, complaint rates, fraud rates, the cost of the main compliance steps. Read every final rule against the draft and the company’s response, and note what changed. Once a year, ask for a short meeting with each relevant department to explain the business and its plans. Review the register at the monthly leadership meeting, and at every board meeting list the drafts the company answered and the ones it missed.

Nothing here is legal or tax advice; confirm the current rule with a chartered accountant or lawyer before acting.