Banks barred from mandating digital channels for availing other services; risk-based monitoring and privacy safeguards to be strengthened
Mumbai – The Reserve Bank of India (RBI) on Friday issued its final set of guidelines governing digital banking channels, making it clear that customers cannot be compelled to accept digital services as a prerequisite for availing any other banking facilities, including debit cards or account-related services.
The regulator emphasised that digital banking services must be provided only after explicit customer consent. “While opting for a bundle of services may be convenient for customers — such as virtual access to card controls — the choice of availing digital facilities shall rest entirely with the customer,” the RBI stated in its circular.
Push toward digital-only banking faces tighter scrutiny
The central bank’s instructions come amid rising concerns that several lenders were aggressively nudging customers into digital-only channels and reducing access to traditional branch services. Complaints had surfaced that banks often activated Internet banking, mobile apps or UPI by default at the time of account opening.
To ensure customer autonomy, RBI has mandated that:
- Customers may decline digital banking services through a written request
- No banking service can be linked to compulsory adoption of digital channels
- Branch-based and offline services must remain accessible and user-friendly
Banking sources indicate that RBI has taken note of service-denial complaints lodged by senior citizens, rural customers and individuals not comfortable with digital interfaces.
Cybersecurity and surveillance architecture tightened
With digital financial transactions expanding rapidly, RBI has also moved to enhance cyber risk controls. Banks are now required to establish risk-based transaction monitoring and surveillance to detect suspicious behaviour in real-time.
Key regulatory conditions include:
- Immediate alerts for unusual or fraudulent transaction patterns
- Improved data protection safeguards for customer information
- Clear communication of digital banking risks and customer responsibilities
The regulator has stressed that no customer should feel coerced or misinformed into using digital channels.
Strengthening consumer rights amid digital growth
Industry experts believe the move strikes the right balance between promoting digital transformation and protecting consumer rights. While India leads globally in digital payments, the RBI’s stance ensures that technological progress does not override inclusivity or freedom of choice.
A senior official at a leading public sector bank noted,
“Technology is transformative, but it cannot be imposed. Customers must always have alternatives.”
Customer convenience remains the core objective
As Digital India enters a new phase of adoption, the RBI’s updated compliance framework aims to ensure that customer convenience — not compulsion — drives digital banking growth. The central bank expects improved customer experience and enhanced security once the new norms are fully operationalised.
