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India’s central bank to set up cloud facility for financial sector

This move could pave the way for a later mandate requiring all financial sector entities to use RBI’s cloud facility for storing their data.

The Reserve Bank of India (RBI) on December 8 announced that it is establishing a cloud facility for the financial sector in India. "Banks and financial entities are maintaining an ever-increasing volume of data. Many of them are utilising various public and private cloud facilities for this purpose. The Reserve Bank is working on establishing a cloud facility for the financial sector in India. The proposed facility would enhance the security, integrity and privacy of financial sector data. It is also expected to facilitate scalability and business continuity." — RBI This cloud facility will be set up and initially operated by Indian Financial Technology and Allied Services (IFTAS), a subsidiary of RBI. Eventually, the facility will be transferred to a separate entity owned by the financial sector participants, the central bank informed. This facility is intended to be rolled out in a calibrated fashion in the medium term, RBI added. This is an interesting move from RBI as it paves the way for a later mandate requiring all financial sector entities to use RBI's cloud facility for storing their data. Tied together with the existing data localisation mandate, these moves indicate an increasing attempt to exert sovereign control over financial sector data. But such actions also pose a compliance burden to industry players and might deter innovation and lead to service disruptions as we saw in the case of global card networks being banned from issuing new cards owing to non-compliance with the data localisation mandate. This move would also make…

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