India relaxes rules for digital banking operations
- ByStartupStory | November 30, 2025
RBI’s New Framework Prioritises Customer Choice And Consent Over Mandatory Digital Adoption
The Reserve Bank of India (RBI) has introduced the Digital Banking Channels Authorisation Directions, 2025, standardising and easing regulations for banks offering internet, mobile, USSD, and SMS banking services. Effective January 1, 2026, the guidelines replace fragmented instructions with a unified authorisation process that emphasises explicit customer consent and prohibits forced digital adoption. Banks must now secure recorded approval before activating any digital channel, ensuring customers retain full access to core services like debit cards without digital mandates.
Customer-Centric Protections Take Centre Stage
Key reforms ban bundling digital banking with other facilities, allowing customers to opt out freely without penalties. Terms must appear in simple language across English, Hindi, and regional dialects, accompanied by mandatory SMS/email alerts for all transactions. Network-independent access via USSD ensures inclusivity across mobile operators, while risk-based limits, fraud monitoring, and compliance with KYC/AML standards safeguard operations.
Streamlined Approvals For Banks
Scheduled commercial banks and select entities gain prior RBI approval for full transactional digital services, requiring core banking systems, IPv6 readiness, ₹50 crore net worth minimum, and clean security audits. Approved banks unlock all channels at once, but must maintain comprehensive risk policies covering liquidity, operations, and cybersecurity. The framework repeals prior circulars while grandfathering existing approvals.
Balancing Innovation With Inclusion
This overhaul addresses digital lending concerns spilling into banking channels, fostering sustainable growth amid India’s 80%+ digital transaction surge. By mandating India-based legal jurisdiction and data localisation, RBI reinforces sovereignty while enabling fintech-bank collaborations. The move signals regulatory maturity, protecting 1.4 billion consumers as digital infrastructure scales nationwide.
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