To bolster data security and combat the surge in cybercrime, the Reserve Bank of India (RBI) announced during the monetary policy announcement on Friday that it would introduce a dedicated cloud facility for the financial sector. The cloud facility aims to enhance privacy, scalability, and business continuity.
The RBI recognised that banks and financial entities needed to manage an "ever-increasing volume of data", noting that many banks had already been leveraging cloud facilities to do the same.
RBI Governor Shaktikanta Das' statement read, "Banks and financial entities are maintaining an ever-increasing volume of data. Many of them are utilising the cloud facilities for this purpose. The Reserve Bank is working on establishing a cloud facility for the financial sector in India for this purpose."
The cloud facility is designed not only to enhance security measures but also to provide better scalability and ensure business continuity. RBI envisions a calibrated rollout of this cloud facility over the "medium term," aligning with the evolving needs of the financial sector in India.
Increasing online banking frauds
This move comes after the National Crime Records Bureau (NCRB) reported a surge in cybercrime cases, particularly frauds, in its latest report. According to NCRB, cybercrime cases in Delhi nearly doubled in 2022. The data reveals a substantial increase from 345 cases in 2021 to 685 cases in 2022. Nationally, cybercrime cases across states and union territories witnessed a 24.4 per cent increase.
The NCRB report also outlined that out of the 65,893 registered cybercrime cases in 2022, 64.8 per cent were motivated by fraud (42,710 cases), followed by extortion at 5.5 per cent (3,648 cases).
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In the capital city, 72 cases of online banking fraud were reported in 2022, while 91 OTP frauds and 21 ATM frauds were reported. This highlights the urgency for robust measures to combat cyber threats and safeguard sensitive financial data.
According to a blogpost by Infosys, cloud facilities can significantly strengthen a bank's "computing power", improving its ability to better detect fraudulent activity and suspicious transactions.
Regulatory framework for web-aggregation of loan products
The RBI introduced the regulatory framework for digital lending in August-September 2022. To make the system more transparent for customers, the RBI announced that it would be releasing a regulatory framework for "web-aggregation of loan products" as well.
Governor Das stated, "Several concerns relating to such web-aggregation of loan products harming consumers' interest have come to our notice. It has, therefore, been decided to lay down a regulatory framework for web-aggregation of loan products."
The framework also aims to enhance "customer centricity" in the digital lending ecosystem.
In addition to the cloud facility and regulatory framework, the RBI also proposed the establishment of a fintech repository by April 2024. The Governor has encouraged fintech firms to voluntarily contribute relevant information to this repository, reinforcing collaborative efforts to address emerging challenges in the financial technology landscape.