The Reserve Bank of India (RBI) is set to roll out a pilot program in 2025, to offer affordable local cloud storage to financial firms in India. This cloud platform will collaborate with local IT firms, marking a major step towards reducing the reliance of smaller banks and financial services on foreign cloud providers. Smaller banks often find the current cloud option by foreign banks too expensive. The locally developed solution by RBI aims to bridge this gap by providing cloud services at lower prices while supporting countries’ growing digital economy.
What Exactly are Cloud Services?
Cloud Services are the platforms or software hosted by third-party providers that allow the user to store, manage and access data remotely without relying on devices like hard drives or physical servers. These services provide secure solutions that enable users to save files, databases, and other information on servers provided by third parties. Cloud services offer flexibility, reduce cost, and reduce dependence on physical infrastructure as it allows the user to access data from anywhere with an internet connection.
RBI Offering Affordable Option for Small Firms
The Reserve Bank of India (RBI) is set to launch a cloud platform that will be developed by utilising local IT firms. It will be positioned as a direct competitor to global giants like Amazon Web Services, Microsoft Azure, Google Cloud and IBM Cloud. The cloud service in India is continuously growing and is estimated to be Asia’s third-largest growing cloud service market at $8.3 billion in 2023. It is expected to reach $24.2 billion by 2028. But, it is largely dominated by the foreign market. To clear up this problem and provide a cost-effective solution to smaller banks, RBI governor Shaktikanta Das announced a proposal to establish a public cloud for the financial services industry in December of last year. A senior executive involved in the project shared that the initial phase of the implementation will be on a small scale in the coming months. Over the years, the pilot will expand gradually in phases.
The RBI has appointed the Consultancy Firm EY as the advisor for the project to ensure guidance throughout its development. Indian Financial Technology and Allied Services (IFTAS), in collaboration with the Central Bank’s research wing, are developing the initial framework of the cloud. As the project progresses, it will further evolve under the partnership of the private sector technology firms. Initially, the project will be funded by the Central Bank’s asset development fund. This fund requirement will mount up to ₹229.74 billion at a later stage. The Central Bank plans to invite financial institutions to take equity stakes in the initiative.
In Conclusion, by establishing a cloud service in partnership with local IT firms the Central Bank has taken a major step in its ongoing efforts to promote the localisation of payments and financial data. RBI aims to reduce the dependency on foreign providers by building a secure, homegrown infrastructure and providing an affordable option to small banks who find current offerings unaffordable.
