Brief Overview:
The RBI has released directions for commercial banks (“Banks”) pertaining to compliance, security controls to be adopted by the Banks in relation to digital payments, and supervisory returns to be filed by the Banks. The directions mark a shift from checklist-based compliance to governance led accountability for Banks. By aligning compliance independence, data integrity, and digital payment security oversight by the board of the Banks (“Board”) and senior management of the Banks (“Senior Management”), the framework pushes Banks to build more resilient, transparent, and risk-aware operating systems.
Technical Details:
Compliance Functions
Pursuant to the directions, the Banks shall have a compliance department independent of the internal audit department, which shall be headed by a chief compliance officer (“CCO”). The Senior Management shall establish a written compliance policy for the management and staff to adhere to, which should inter alia cover monitoring mechanism for testing procedures, reporting requirements, functions / responsibilities of the CCO and its support staff, and approval processes for all new processes and products to be overseen by the compliance department.
Supervisory Returns
1) The Board and Senior Management shall include identification / assessing and management of data quality risks across data related processes for reporting to be made to RBI, as part of its overall risk management framework. The framework for the same should include standards for both in-house and outsourced arrangements, and the Bank’s group structure should not impede its ability to aggregate and report data at a consolidated level or at any other relevant level.
2) The data aggregation and reporting shall be considered as an integral part of the business continuity planning process for Banks, which data shall be reconciled by the Banks through their own resources to ensure accuracy and consistency. Further, the Banks shall strive to achieve automation in terms of generating data for filing of returns.
Digital Payments Security Controls
1) The Banks, with the approval of the Boards, shall also formulate a policy governing digital payment products and services, which expressly sets out payment security requirements relating to functionality, security, and performance angles. The Banks shall conduct risk assessment pertaining to the technology platforms utilised both from the server side and the customer side, implement multi-tier application architecture and follow a ‘secure by design’ approach in development of digital payment products and services.
2) The Board and Senior Management shall be responsible for overseeing the implementation of the policy related to digital payment products and services. Further, the Senior Management shall evaluate the efficiency of the security built into the digital payment product / service and revise the business plan / strategy, as necessary, based on actual outcomes and risk assessment findings.
Takeaways:
These directions signal the RBI’s intent towards ensuring enhanced governance for digital payments, supervisory returns and overall compliance functions pertaining to the Banks. Further, Banks are required to strengthen Board and Senior Management oversight, adopt formal policies, and implement risk-based processes.
For further details, please see:
- Reserve Bank of India (Commercial Banks – Digital Payment Security Controls) Directions, 2026
- Reserve Bank of India (Commercial Banks – Compliance Function) Directions, 2026
- Reserve Bank of India (Commercial Banks – Supervisory Returns) Directions, 2026
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