RBI to set up cloud facility for financial sector and fintech repository; here is what you need to know

The Reserve Bank of India (RBI) decided to maintain a status quo in policy rate for the fifth time in a row in its latest policy meeting, which concluded on Friday, December 8. The repo rate currently stands at 6.5 per cent and RBI Governor Shaktikanta Das attributed declining inflation as the reason behind keeping the repo rate unchanged.

Along with this, the governor made many major announcements, including the setting up of cloud facilities for the financial sector and a fintech repository.

How will setting up cloud facilities impact the financial sector?

According to Anil Sinha, Chief Technology Officer, Fibe, the move to set up a cloud facility will keep financial sector data safe and will help early-age fintech startups scale up their operations.

"The proposal to set up a cloud facility for the financial sector in India is a proof point of India’s indigenous tech capabilities. Besides safeguarding the safety, security, and privacy of all financial data, it will also help early-age fintech startups scale up their operations in a seamless manner," said Sinha.

"For NBFCs and fintech, one of the major decisions the RBI has taken is to set up a fintech regulatory framework. It is aimed at safeguarding the interests of borrowers by bringing new guidelines for web aggregators of loan products and introducing more transparency and discipline in the digital lending space," said Aditya Damani, Founder and CEO, Credit Fair.

Echoing similar view, Agam Gupta, Executive Director, Share India FinCap said, "The cloud facility is made to improve security protocols, offer improved scalability, and guarantee company continuity."

Gupta added this action is in response to a recent report from the National Crime Records Bureau (NCRB) detailing an increase in cybercrime charges, specifically fraud instances. A bank's "computing power" can be greatly increased by utilising cloud facilities, which will help it identify suspicious transactions and fraudulent activity more accurately.

Neeloy Majumder, Chief Operating Officer – Technology, Tata Motors Finance also thinks that cloud facility backed by the RBI will have a positive impact on the financial sector.

“The future is in digital, and the way forward is intricately woven with it. A cloud facility backed by the RBI can be a transformative force to foster innovation and ensure a robust layer to data security and privacy. As digital users continue to rise, harnessing the potential of cloud technology on the RBI-led platform can enable Financial Institutions to further enhance and fortify their operational scalability, streamline big data processes, and as a result elevate customer experiences, propelling India at the forefront of becoming a future-ready and resilient financial powerhouse,” said Majumder.

Additionally, for a better understanding of the developments in the fintech ecosystem, Das said they have proposed to set up a repository for capturing essential information about fintech, encompassing their activities, products, technology stack, financial information, and others.

What is a repository?

According to Phoenix Nap Global IT Services, a repository is computer storage for maintaining data or software packages. This location contains files, databases, or information organised for quick access over a network or directly.

As per the announcement, fintech firms can provide relevant information voluntarily to the repository.

Fintechs would be encouraged to provide relevant information voluntarily to the repository, which will aid in designing appropriate policy approaches. The repository will be operationalised by the Reserve Bank Innovation Hub in April 2024 or earlier.

Sinha said that the RBI's move to set up a fintech repository will ensure better transparency and cooperation between the fintech ecosystem and the regulator.

Sinha added that in a country like India, such a repository will provide more impetus to innovation and creativity, thereby opening new opportunities.

Expressing his view, Anand Agrawal, Co-Founder and CPTO, Credgenics said, "RBI’s proposal to create a fintech repository is a very positive move for the industry, as it will further catalyse innovation by fostering transparency and improved collaboration among fintechs, other financial services industry players, and regulators. The approach to encouraging voluntary contributions from fintechs will empower regulators with real-time insights and enable informed, agile, and risk-mitigating decision-making."

Agrawal added this initiative is a crucial step in the RBI’s approach to streamlining the regulatory framework for fintechs. It will boost market confidence while ensuring a dynamic and well-regulated environment for the continuous evolution of the Indian fintech industry.

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