RBI Launches Major Digital Banking Initiative to Ease Workload on Banks

New Delhi: The Reserve Bank of India (RBI) has taken a significant step to streamline digital banking operations across the country. On Friday, the central bank issued seven new ‘Master Directions’ specifically targeting digital banking practices for commercial banks, small finance banks, and other financial institutions.

This move is part of RBI’s broader mission to simplify and consolidate regulations, reducing unnecessary paperwork and making banking operations more efficient. With these new directives, banks and financial institutions will face less administrative burden, improving both internal workflows and customer service.

Consolidating Regulations

RBI has so far issued a total of 244 Master Directions, which consolidate previously fragmented and scattered instructions. These seven new directions focus exclusively on digital banking and apply to commercial banks, small finance banks, payment banks, local area banks, regional rural banks, urban co-operative banks, and rural co-operative banks. The new rules for digital banking will come into effect from 1 January 2026.

Strong Policies Required

Under the new directives, all banks must establish robust digital banking policies, addressing legal requirements, liquidity management, and potential risks associated with digital operations. Digital banking encompasses services delivered via internet banking, mobile banking, or any other electronic devices, where the majority of processes are automated or machine-driven.

RBI’s Streamlining Drive

The RBI highlighted that its regulatory consolidation initiative, ongoing for the past six months, has now been completed. As part of this exercise, 5,673 outdated circulars that were no longer relevant have been cancelled, paving the way for a clearer and more efficient digital banking framework.

This move is expected to ease operational pressures on banks, enhance regulatory clarity, and accelerate the adoption of digital banking across India.