Digital Banking: RBI Seeks To Tighten Rules, Proposes Mandatory Prior Nod, Cyber Audit

The Reserve Bank of India has released a draft circular on digital banking, which has proposed to bring all commercial and cooperative banks under a uniform regulatory umbrella for offering internet and mobile banking services, it said in a press release.

According to the draft circular, banks should require prior approval from the RBI before launching full-scale transactional digital banking services such as fund transfers and loan applications.

Only 'view-only' services such as balance enquiry and statement downloads can be offered without prior nod, provided certain technological infrastructure conditions are met.

In order to be eligible, banks must demonstrate full core banking solution implementation, IPv6-compliant IT infrastructure and minimum net worth of Rs 50 crore or regulatory threshold, whichever is higher.

Further, a clean track record on cyber security and regulatory compliance is also a must, the RBI said.

Additionally, banks must submit a comprehensive audit report, certified by a CERT-In empaneled auditor which will highlight internal control adequacy and technological preparedness.

The draft has also mandated that banks cannot force customers to adopt digital channels as a prerequisite for availing other services like debit cards. Explicit customer consent, multilingual terms and conditions, and transparent disclosures on charges and risks will be essential.

Importantly, third-party products, including those of promoter or group companies, are barred from being advertised or sold through digital banking platforms unless explicitly permitted by the RBI.

The proposed guidelines, once finalised, will supersede over 15 legacy circulars and directions that currently govern internet and mobile banking in India. The RBI has invited public comments on the draft till August 11 via its 'Connect 2 Regulate' platform.