The Reserve Bank of India (RBI) is planning to make digital banking more secure, transparent, and customer-friendly. To achieve this, it has released a draft of new regulations. According to the proposed rules, banks will now have to obtain a customer’s clear and recorded consent before offering any digital banking services. This means you won’t be given access to online or mobile banking unless you explicitly say “yes.”
What Do the New Rules Say?
If banks want to launch any digital service that involves financial transactions (like fund transfers or loans), they must first get special approval from the RBI. Moreover, they must get the customer’s consent in advance and keep a secure record of it.
Banks will also be required to strictly follow all rules related to IT outsourcing, digital payment security, and fraud prevention while offering digital services. Digital banking includes internet banking, mobile banking apps, and other electronic platforms (such as tablets).
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Two Types of Digital Services, Two Sets of Rules
Currently, banks offer two types of digital services:
- View-only Services: These include balance inquiries and downloading bank statements. No financial transaction occurs.
- Transactional Services: These include transferring money, applying for loans, or paying bills – all involving monetary transactions.
What Will Change According to the New Draft?
- View-only Services: Banks can launch them immediately but must notify the RBI within 30 days of launching.
- Transactional Services: Banks must seek prior approval from the RBI before starting. To qualify, a bank must have minimum total assets of ₹500 crore, a strong technical system in place, and an audit report from CERT-In (Indian Computer Emergency Response Team).
Good News for Customers: More Clarity and Safety
The draft includes several provisions to protect customer interests:
- Clear Consent and Easy-to-Understand Terms: Banks must clearly obtain customer consent for digital services. Terms and conditions must be provided in simple language (English, Hindi, or local languages) so that every customer can understand them.
- Fraud Control: Banks will have to set transaction limits, regularly check for fraud, and monitor customer banking behaviour to quickly detect any suspicious activity.
- Restriction on Third-Party Products: Banks can display third-party services or products on their digital platforms (apps or websites) only if those products are approved by the RBI. Any product without RBI’s approval will not be allowed.
What’s Next?
The RBI has invited feedback from the public, banks, and other stakeholders on the draft regulations by August 11, 2024. Final rules will be issued after reviewing all suggestions.