RBI monetary policy: RBI Focuses on Cloud Facility for Financials: Governor Shaktikanta Das

RBI Focuses on Cloud Facility for Financials: Governor Das Highlights Data Security

During the recent announcement of the Monetary Policy Committee (MPC) on December 8, 2023, RBI Governor Shaktikanta Das emphasized the pivotal role of a proposed cloud facility for financial institutions in India. The initiative aims to bolster data security and integrity within the financial sector.

Cloud Facility Proposal:

Governor Das unveiled a proposal to establish dedicated data storage facilities for financial entities in India, recognizing the mounting volume of data maintained by banks and financial institutions. The Reserve Bank of India is actively working on setting up a specialized cloud infrastructure tailored for the financial sector.

Objectives and Impact:

This envisioned cloud facility is anticipated to significantly elevate data security, integrity, and privacy standards within the financial realm. Additionally, the facility is poised to offer scalability and ensure seamless business continuity for financial institutions.

IFTAS and Ownership Transition:

Initially, the Indian Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of RBI, will oversee the setup and initial operations of the cloud facility. Subsequently, the plan entails transferring the responsibility of managing the cloud infrastructure to an entity collectively owned by participants in the financial sector.

Industry Voices on the Initiative:

Notable industry figures, including Somdutta Singh from the Government of India and Edul Patel, CEO of Mudrex, commend the thoughtful approach and collaboration involved in the phased rollout strategy and the transition to a sector-owned entity.

Implications for Financial Institutions:

Experts like Vivek Iyer from Grant Thornton Bharat and Harsh Dugar, Executive Director at Federal Bank, underscore the transformative potential of cloud integration for financial institutions. It can enable innovations in regulatory reporting, credit information exchange, e-KYC integration, and responsible growth in digital lending.

Global Cloud Migration Trends:

Highlighting global trends, a report by Capgemini indicates a significant surge in cloud migration within the financial sector, indicating a paradigm shift toward cloud adoption as the future of financial institutions.

Scalability and Business Continuity: Key Benefits

The cloud facility is expected to offer several benefits beyond data security. These include:

• Scalability: This allows financial institutions to easily and quickly scale their data storage and computing capabilities as needed.

• Business continuity: The cloud facility will provide robust backup and disaster recovery solutions, ensuring business continuity even in the event of unforeseen circumstances.

A Welcome Move for the Future of Digital Lending

The proposed cloud facility is seen as a positive step towards promoting responsible growth in digital lending. This initiative aims to:

• Ensure fair practices and customer protection.

• Enhance transparency in the digital lending space.

• Facilitate responsible growth by providing a secure and reliable platform.

Conclusion: A Step Towards a More Secure and Innovative Financial Sector

The RBI's proposal for a cloud facility dedicated to financial institutions is a welcome development. This initiative promises to enhance data security and privacy, improve scalability and business continuity, and foster innovation in the digital lending space. As the global adoption of cloud technology in the financial sector continues to grow, the RBI's initiative positions India as a leader in this space.