The Development And Regulation Of Digital Banking In India
- IJLLR Journal
- Apr 29
- 2 min read
Ananya Kashyap, LL.M. (Corporate, Banking & Insurance Law), Amity Law School, Amity University, Noida
ABSTRACT
The study focuses on the institutional and legal frameworks that drive digital banking expansion in India, with particular attention to its development, regulation, and new issues. The Indian banking industry's transformation from a paper-based system to digitized systems is detailed in the report. Three main phases of development are the pre-digitalization, post-liberalisation, and current digital transformation. These stages have been grouped together as follows: Each stage shows how technology is becoming more integrated and financial services are becoming easier and more efficient.
Critical consideration is given to the role of the Reserve Bank of India (RBI) as a regulator and promoter of digital banking. RBI has actively encouraged innovation and kept the economy in check through schemes like regulatory sandboxes and CBDC pilots, as well as policy initiatives such as NEFT, RTGS, UPI, and ICT. It has also established a range of regulatory frameworks, such as cybersecurity measures, licensing requirements, and compliance processes like AML and KYC standards.
The research also scrutinizes the legislation that governs digital banking, with particular attention to crucial statutes like the RBI Act of 1934, the Payment and Settlement Systems Act (PPSA) of 2007, and the Information Technology Act (220). Additionally, However, these regulations are fragmented by regulatory overlap and lack of a single fintech regulatory framework.
Furthermore, the report explores current payment methods and innovative technologies such as blockchain and Central Bank Digital Currency (CBDC), emphasizing their potential to enhance corporate banking's security, efficiency, and transparency. Nevertheless, it highlights the serious problems of cybersecurity risks, international relations and regulatory incompetence.
Keywords: Digital Banking, Financial Technology (FinTech), Reserve Bank of India (RBI), Unified Payments Interface (UPI), NEFT, RTGS, IMPS, Regulatory Framework, Cybersecurity, Blockchain, Central Bank Digital Currency (CBDC), Financial Inclusion, Payment Systems, Data Protection, Digital Economy
