RBI Draft Master Direction on Digital Banking Channels
The RBI has released a Draft Master Direction on Digital Banking Channels to streamline how banks and NBFCs offer digital services. This move aims to create a single regulatory framework for mobile apps, internet banking, UPI, and future digital innovations. It is now open for public feedback till 31st August 2025.
Why This Draft Matters
The banking landscape is rapidly shifting from physical to digital. But there’s no single regulation governing all digital channels. RBI’s draft aims to fix that.
Key objective:
Provide consistent rules for all banks and NBFCs offering digital financial services — especially through mobile apps, internet banking, and digital interfaces.
What the Draft Covers
Here are the major provisions under the Draft Master Direction on Digital Banking Channels:
| Area of Regulation | Key Proposals |
|---|---|
| Applicability | Scheduled Commercial Banks, Small Finance Banks, Payments Banks, and NBFCs |
| Pre-Launch Approvals | Mandatory approval before launching any Digital Banking Product (DBP) |
| Digital Business Unit (DBU) | Only banks can establish DBUs. NBFCs not permitted |
| Change Management Process | Formal procedures to manage upgrades and version changes |
| App Store Policy | All digital apps must be officially listed on platforms like Google Play |
| Customer Support | 24×7 helpdesk with SLA-bound issue resolution |
| Incident Reporting | Reporting material incidents (like security breaches) within 6 hours |
| Audit Trail & Logs | Minimum 2-year log retention for all customer-facing digital channels |
| Third Party Vendors | Banks/NBFCs must conduct due diligence and hold vendors accountable |
Focus on Mobile and Internet Banking
As per RBI’s draft, Mobile Banking and Internet Banking must follow:
- UI/UX consistency
- Secure onboarding with Aadhaar/OTP/VCIP
- Real-time monitoring of failed transactions
- Tools for customer self-service and grievance redressal
Focus keyphrase: Digital Banking Channels must comply with stringent IT and risk guidelines to ensure trust and stability in India’s financial ecosystem.
RBI’s Legal Basis
The draft is issued under the following statutory provisions:
- Section 35A of the Banking Regulation Act, 1949
- Section 45L of the RBI Act, 1934 (for NBFCs)
- RBI Master Circular on Internet Banking (2001, updated periodically)
- IT Act 2000 – for cybersecurity and electronic records compliance
This strengthens RBI’s supervisory role while empowering regulated entities to innovate responsibly.
What Should Banks & NBFCs Do Now?
If you’re a compliance head, CTO, or consultant in the BFSI space, here’s what needs to be done:
✅ Review your current mobile app and internet banking platforms
✅ Prepare for mandatory RBI approval before launching any new digital product
✅ Draft or update internal Change Management and Incident Response SOPs
✅ Ensure 2-year digital log retention and real-time fraud alerts
✅ Align all third-party contracts with new RBI standards
Expert View from Efiletax
“Most NBFCs today use white-labeled fintech apps without fully owning the digital journey. Under this Draft, they must take direct accountability — including approvals, IT audits, and data trails. This marks a decisive shift in RBI’s supervision,” says a senior tax-tech consultant at Efiletax.
Deadline to Submit Comments
Public and stakeholder comments can be submitted to RBI till 31st August 2025 via email at dbodco@rbi.org.in with the subject: “Feedback on Draft Master Direction – Digital Banking Channels.”
FAQs
Q1. Who is covered under this Draft Direction?
Banks (excluding cooperative banks), NBFCs, and any regulated entity offering customer-facing digital banking.
Q2. Can NBFCs run their own internet banking platforms?
Yes, but they must take prior approval and follow all proposed guidelines.
Q3. Are APIs and embedded finance tools covered?
Yes. The draft includes any third-party integration or digital front-end used by banks/NBFCs.
Final Thoughts
RBI’s Draft Master Direction on Digital Banking Channels is not just another compliance mandate. It signals a long-overdue push to modernize and standardize India’s digital financial infrastructure. From fintech-led NBFCs to PSU banks, the rules are about to become tighter — and clearer.
👉 If your firm needs help reviewing digital banking compliance or implementing RBI norms, contact Efiletax — your compliance partner for the digital era.
Summary
RBI’s Draft Master Direction on Digital Banking Channels proposes unified rules for mobile apps, internet banking, and NBFC platforms. It mandates prior approval, incident reporting, 2-year log retention, and secure digital processes. Public comments open till 31 August 2025. Stay compliant with Efiletax.