Online gaming ban: Banks evaluate next steps on RMG entities; tighten real-time payments monitoring

The Act says that banks, payment providers, or intermediaries who process RMG payments can face up to 3 years in prison and a fine of Rs 1 crore

Banks have tightened their scrutiny over online payments following the recent ban on online real money games. The Promotion and Regulation of Online Gaming Act, 2025 calls for curbing real money gaming apps, terming such gaming apps illegal. It also comes down heavily on financial service providers barring banks and financial institutions from processing payments linked to these platforms. The Act says that banks, payment providers, or intermediaries who process RMG payments can face up to 3 years in prison and a fine of Rs 1 crore.

“While most banks monitor outgoing and incoming payments on a real-time basis, after this bill, our scrutiny parameters must be further sharpened. Some banks are in the process of improving their real-time monitoring of payments,” said a senior banker who did not want to be named.

Meanwhile, banks have also reached out to the Reserve Bank of India to understand how such gaming companies should be treated from a banking relationship standpoint. The contention here is whether banks should suspend all their banking channels with these entities or they would be given time to do so. The dilemma is because the Act clamping down on the activity terms such entities as ‘illegal’. “Owing to this clause, it would not be proper for us to deal with these companies any longer and we will have to suspend our relationships with them,” said a banker. Essentially from a Know Your Customer (KYC) perspective as the underlying business--- real money games--- is illegal the corporate entity is on a weak legal wicket.

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What further complicates the issue is that some money gaming companies which also have a revenue stream from non-money gaming businesses. As a banker explains, not all these entities have bifurcated their banking relations to separate RMG business and non-RMG business.

“Therefore, will these companies at an entity level also be classified as illegal and if yes, will we have to terminate our business ties immediately? These are some aspects we have sought clarification from the government and RBI,” said another senior bank official who didn’t want to be identified. Given that the implications of continuing to deal with such entities may have legal consequences, banks are being very cautious.

“Entities which are 100% into real money gaming, we have started closely engaging with them on their further action. But a few entities which have non-RMG revenue streams have sought time to restructure their business and banking accounts, so that the entire entity is not termed illegal,” said a legal head of a private bank. He added that within the next 2 – 3 days there would be clarity on this matter, and steps are being taken to ensure that at least the non-RMG businesses of gaming entities are shielded to the extent possible.