Banking Central | Mint Road is upgrading its tech, that is a good change

RBI is leading the change in banking tech

This Monday, let’s talk about technology — not the one banks rely on but the banking regulator. The Reserve Bank of India (RBI) is often seen as a cautious regulator, taking measured steps to balance stability with innovation. It is a good thing for the industry, as the central bank is the guardian of the financial system.

A closer look shows that the RBI has also turned into a quiet technology leader, adopting digital tools not merely to regulate but to transform its functioning as well.

The message is clear: if the regulator can embrace technology, banks and financial institutions have no excuse to fall behind.

Here are a few examples:

Account aggregator (AA) framework

Empowering customers by giving them control over their financial data, the RBI has created an entirely new digital public infrastructure.

The account aggregator system is more than a compliance tool. It shifts the balance of power to the individual, allowing seamless, consent-driven sharing of data across institutions.

In turn, it paves the way for better credit assessment, more tailored financial products and a sharp reduction in the paperwork-driven friction that has historically slowed down lending.

The fact that the RBI not only backed but nurtured this ecosystem shows a regulator willing to use technology as an instrument of empowerment.

Unified Lending Interface

The Unified Lending Interface is another component of the tech stack that makes credit delivery seamless. While through Unified Payments Interface (UPI) India has already shown the world the power of a digital payments backbone, ULI has the potential to replicate that success in credit markets. How does it help? By creating a common, interoperable rail for lending, the RBI is directly addressing inefficiencies that have long plagued the system — delays, duplication, and opacity.

If UPI democratised payments, ULI can democratise credit but one needs to wait and see how it evolves.

Pravaah

Pravaah, which loosely translates to flow in Hindi, is a platform designed to improve services to regulated entities. For years, banks and non-bank players have complained about regulatory interactions being opaque, paperwork-heavy, and slow.

By digitising these processes, the RBI has signalled that accountability and efficiency must begin at home. A regulator that expects transparency from its entities must hold itself to the same standard. With Pravaah, the RBI is living up to that expectation.

Speaking at FIBAC recently, RBI governor Sanjay Malhotra also made it clear that the central bank is not treating artificial intelligence (AI) and machine learning (ML) as mere buzzwords. Instead, it is weaving them into its supervisory and operational toolkit. From real-time monitoring of transactions to predictive risk analytics, these technologies are no longer futuristic add-ons but core enablers of RBI’s mandate.

Malhotra’s message that regulated entities too must invest in AI and ML underscores a subtle shift: banks cannot simply view technology as an optional investment. It is now integral to survival.

From a systemic point of view, these changes at the RBI are crucial. It is forcing banks to confront a simple truth: innovation is not just for fintech start-ups. It is a necessity for every financial institution that wants to stay relevant in an economy that is digitalising at a fast pace.

That said, challenges remain.

The biggest challenges are data security, interoperability, and the readiness of smaller players to adopt such systems —  all of which will test the resilience of these initiatives.

But if India’s experience with UPI is any indication, public digital infrastructure, once seeded, has the power to reshape markets at scale. The RBI’s digital push is not just about improving regulatory efficiency. It is about setting standards for an industry where legacy processes still dominate operations.

The RBI is no longer content just issuing guidelines but it is creating platforms that show the way forward — a message hard for banks to miss.

(Banking Central is a weekly column that keeps a close watch on and connects the dots regarding the sector's most important events for readers.)