The Reserve Bank of India (RBI) has updated its rules about digital banking channels (like mobile apps and online banking).
Important Features of the Updated Rules
Banks can now advertise certain products online:
Earlier, banks were restricted from showing third-party products (like insurance, mutual funds, or FinTech products) on their digital platforms. Now, after a customer logs in to their banking app or website, banks can display different types of products that they are allowed to offer through branches. This includes banking products, government schemes (like PMJDY) and third-party financial products for which the bank has a distribution agreement.
No need to get RBI approval for new digital channels:
Earlier, banks had to seek RBI approval whenever they launched a new digital channel. Now, banks don’t need prior approval if they add a new digital service or channel (like a new app feature or online platform)., as long as they already have proper cybersecurity and risk management in place.
Less strict rules on transaction monitoring:
One of the key changes in the new guidelines is a relaxation of transaction monitoring requirements. Earlier, the draft rules required banks to closely monitor unusual transactions, track customer behavior, and obtain prior confirmation for “outlier” transactions. Banks raised concerns that this was hard to implement, and the RBI agreed, noting that such checks are already covered under existing fraud risk management rules.
Financial requirements for banks remain strict:
Under the new guidelines, banks are still required to maintain net worth ₹50 crore and meet the prescribed capital adequacy norms. Although banks requested that these financial requirements be reduced or removed, RBI decided to keep them because digital banking carries significant risks, particularly related to cybersecurity, and banks need enough financial strength to handle any potential losses from such risks.
Overall, these changes are meant to help banks launch digital services faster and make online banking smoother for everyone. Some complicated monitoring rules were removed because they are already handled elsewhere but still need strong financial strength.
