RBI Aims to Tighten Rules for Digital Banking

The Reserve Bank of India (RBI) has proposed sweeping changes to the governance of digital banking services to safeguard consumer choice and tighten oversight. Through its newly released Digital Banking Channels Authorisation Directions, open for public feedback until August 11, the regulator has targeted practices such as mandatory digital opt-ins and the unchecked promotion of third-party services on banking platforms.

Ban on Cross-Selling via Digital Platforms

In a major shift, the RBI has proposed that banks be barred from showcasing 3rd-party products, including those from their own promoter or group entities, on digital banking channels, unless expressly permitted by the regulator.

According to the draft directions: “Third-party products and services, including those of promoter groups or bank group entities, shall not be displayed on banks' digital banking channels except as specifically permitted by the Reserve Bank from time to time.” This move is expected to restrict cross-selling practices that have become commonplace across online banking ecosystems.

Emphasis on Customer Consent and Approval Process

A key provision of the draft is that banks must obtain explicit and documented customer consent before offering digital banking services. Moreover, customers must not be compelled to adopt digital banking channels in order to access other essential services like debit cards.

The RBI also stated: “Banks shall require prior approval of the Reserve Bank of India for launching transactional banking facilities.” Banks currently offering services such as mobile or internet banking will need fresh approval to launch additional digital platforms. Senior management will be held accountable for risk oversight, and all digital operations must align with robust policies covering liquidity, operational risks, and regulatory compliance.

Eligibility Criteria for Digital Banking Access

The draft further clarifies that only banks which have already implemented core banking solutions and upgraded their IT infrastructure to handle Internet Protocol version 6 (IPv6) can offer view-only access to internet or mobile banking services. This includes any other future digital banking channels as deemed fit by the RBI. Additionally, comprehensive digital banking policies must be formulated and adhered to at the institutional level, reinforcing governance and risk management frameworks.

Also Read: SEBI Proposes New Categorisation and Rationalisation Norms for Mutual Fund Schemes!

Conclusion

The RBI’s draft framework signals a decisive shift towards protecting digital banking users from coercive practices and ensuring that customer consent remains central. With the August 11 deadline for public comments looming, the banking industry may need to prepare for fundamental operational changes all aimed at making digital banking more transparent, accountable, and consumer-friendly.

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