RBI Plans to Establish Cloud Facility for Financial Sector in India to Boost Security and Privacy of Financial Data

Key Takeaways:

1. The proposed cloud facility by RBI aims to enhance the security, integrity, and privacy of financial sector data, while also facilitating scalability and business continuity.

2. Initially, the cloud facility will be operated by Indian Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of RBI, and will later be transferred to a separate entity owned by financial sector participants.

3. The cloud facility is intended to be rolled out in a calibrated fashion in the medium term and will serve as a digital public infrastructure, not in pursuit of data sovereignty.

4. The RBI’s Deputy Governor, Rabi Sankar, mentioned that the cloud facility will not pursue data sovereignty but will focus on ensuring data security, integrity, and safety.

5. The initiative is expected to fast forward innovation in the financial sector by at least five years, according to Vivek Iyer, Partner at Grant Thornton Bharat.

The Reserve Bank of India (RBI) has proposed the establishment of a cloud facility for the financial sector in India, with the aim of enhancing the security, integrity, and privacy of financial sector data. This initiative is expected to facilitate scalability and business continuity, and it is not in pursuit of data sovereignty. The cloud facility will be initially operated by Indian Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of RBI, and will eventually be transferred to a separate entity owned by the financial sector participants. The RBI clarified that the cloud facility is intended to be rolled out in a calibrated fashion in the medium term and will serve as a digital public infrastructure.

The Deputy Governor of RBI, Rabi Sankar, emphasized that the objective of the cloud facility is to ensure data security, integrity, and safety. He mentioned that the form of the cloud facility, whether it will take the form of Infrastructure as a Service (IaaS) or provide storage platforms or software, will be decided in the course of time.

Vivek Iyer, Partner at Grant Thornton Bharat, expressed that the cloud infrastructure being provided by the regulator as a public good is a game changer and can fast forward innovation in the financial sector by at least five years. He also highlighted potential use cases of the cloud facility, such as facilitating innovations around regulatory reporting, exchange of credit information amongst regulated entities through a credit registry built on to the same cloud, and integration of e-KYC into the cloud.

It’s important to note that earlier, the central bank had asked payments facilitators such as Visa, MasterCard, Google, or WhatsApp to ensure that data related to payment systems operated by them are stored only inside the country.

This initiative by RBI reflects the increasing digitization and the rising demand for data, encompassing aspects such as data storage and processing, and aims to address the efficiency concerns in this context.

FAQ

Q1: What is the purpose of RBI’s proposed cloud facility for the financial sector in India?

A1: The purpose is to enhance the security, integrity, and privacy of financial sector data, while also facilitating scalability, business continuity, and efficiency in data storage and processing.

Q2: Who will initially operate the cloud facility, and what are the long-term plans for its operation?

A2: The cloud facility will be initially operated by Indian Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of RBI, and will eventually be transferred to a separate entity owned by financial sector participants.

Q3: Is the cloud facility intended to pursue data sovereignty?

A3: No, the cloud facility is intended to serve as a digital public infrastructure and is not in pursuit of data sovereignty. Its objective is to ensure data security, integrity, and safety.