The Reserve Bank of India (RBI) has announced its plan to establish a cloud facility for the financial sector in India. The facility will be designed to enhance the security, integrity, privacy, scalability, and business continuity of financial sector data. The facility will be initially operated by a subsidiary of RBI, and later transferred to a separate entity owned by the financial sector participants.
RBI’s cloud facility to serve as digital public infrastructure
The RBI’s cloud facility will serve as a digital public infrastructure for the financial sector, similar to the government’s initiatives such as Aadhaar and UPI. The facility will not pursue data sovereignty, but will focus on providing IT infrastructure to improve efficiency and innovation. The facility will be set up and initially operated by the Indian Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of RBI. IFTAS is a not-for-profit company that provides IT solutions and services to the Indian banking and financial sector.
The RBI said that the facility will be rolled out in a calibrated fashion in the medium term. Eventually, the cloud facility will be transferred to a separate entity owned by the financial sector participants, such as banks, non-banking financial companies, payment aggregators, and fintech firms. The RBI said that the facility will facilitate scalability, especially for smaller entities that may not have the resources or skills to maintain their own databases and systems.
RBI’s cloud facility to compete with global players
The RBI’s cloud facility will directly compete with similar services offered by global players such as Amazon, Google, and Microsoft. These companies provide cloud computing services to various sectors, including the financial sector, in India and abroad. Cloud computing refers to the delivery of computing services such as servers, storage, databases, networking, software, analytics, and intelligence over the internet. Cloud computing enables users to access data and applications from anywhere, anytime, and on any device.
The RBI’s cloud facility will offer an alternative to the financial sector entities that are currently using public and private cloud facilities provided by these global players. The RBI said that the facility will enhance the security, integrity, and privacy of financial sector data, which is of paramount importance for the stability and resilience of the financial system. The RBI also said that the facility will ensure compliance with the regulatory requirements and standards for data storage and processing.
RBI’s cloud facility to boost fintech innovation
The RBI’s cloud facility will also boost the fintech innovation in the country, as it will enable the financial sector entities to leverage the latest technologies and solutions for their business needs. The RBI said that the facility will support the development and deployment of new products and services, such as digital lending, payments, insurance, wealth management, and robo-advisory. The RBI also said that the facility will foster collaboration and interoperability among the financial sector participants, and create a level playing field for all.
The RBI’s cloud facility is part of its broader vision to promote digital transformation and financial inclusion in the country. The RBI has been taking various measures to encourage the adoption and integration of digital technologies in the financial sector, such as issuing guidelines for digital payment systems, sandboxing fintech innovations, and regulating entities facilitating cross-border payment transactions. The RBI’s cloud facility will further enhance the digital capabilities and competitiveness of the financial sector in India.
