RBI issues new master directions on digital banking
The new directions are part of a massive exercise taken by the Reserve Bank of India to enhance clarity, ease of access, and reduce compliance burden for regulated entities.
The Reserve Bank on Friday issued seven new master directions on digital banking channels authorisation for regulated entities, including commercial banks and small finance banks.
This is part of a massive exercise taken by the Reserve Bank of India (RBI) to enhance clarity, ease of access, and reduce compliance burden for regulated entities (REs), thereby supporting the broader objective of improving ease of doing business.
After consultations with stakeholders, the central bank has issued 244 master directions (MDs) consolidating the instructions currently administered by the Department of Regulation on an 'as-is' basis.
These instructions have been issued separately for 11 types of regulated entities and are cohesively organised across various regulatory areas.
The 244 master directions include seven new MDs on "Digital Banking Channels Authorisation" for seven types of REs.
The seven REs are: commercial banks, small finance banks, payment banks, local area banks, regional rural banks, urban co-operative banks, and rural co-operative banks.
The new directions on digital banking channels will be applicable from January 1, 2026.
The directions primarily deal with policies and procedures, eligibility criteria for providing various services, guidelines on technological issues in digital banking, compliance, customer conduct, and exemptions.
According to the directions, all REs will have to put in place comprehensive policies for all digital banking channels, keeping in account all statutory and regulatory requirements (including on management of liquidity and operational risks in the digital banking scenario).
Digital banking channels refer to modes provided by the banks over websites (internet banking), mobile phones (mobile banking) or other digital channels through customers' electronic devices/equipment for the execution of financial and other banking transactions involving a significant level of process automation and/or interfacing with other institutions/entities.
The move marks a partial reversal from the draft norms issued in July, which would have barred banks from displaying any third-party products on digital channels.
For customers, the change means familiar offerings such as insurance, mutual funds, sovereign schemes, and other products they already see at a branch will continue to appear inside net-banking and mobile apps, though only after login. Pre-login interfaces are expected to remain largely free of such promotions.
The RBI also dropped its earlier plan to require banks to seek approval every time they introduce a new digital channel. “Prior approval requirement (has been) removed for any additional channels as the bank providing one digital channel is expected to have appropriate wherewithal,” the regulator said.
In the final guidelines released on Friday, the RBI said banks may display “only those products which are specifically permitted for a bank to deal in” once a customer logs in, including government schemes and third-party financial products where the bank is an authorised distributor.
“Only those products and services which are allowed to be offered to a customer through a branch customer interface... may be available for a customer to view post login,” the RBI said.
That decision is likely to speed up new app launches, interface upgrades and experimental digital formats, a shift that could affect customer experience as banks iterate more quickly.
(With inputs from PTI)