In a significant move aimed at bolstering the financial infrastructure of India, the Reserve Bank of India (RBI) has announced plans to launch a pilot program in 2025 that will provide affordable local cloud data storage solutions exclusively for financial institutions. This step, which is expected to foster a competitive landscape within the cloud services sector, is a pivotal initiative as it marks the first such effort from a major central bank globally. With the local IT firms in the driver’s seat, this program stands to challenge the dominance of established international cloud service providers like Amazon Web Services, Microsoft Azure, and Google Cloud.
The RBI’s initiative comes against the backdrop of an exploding demand for cloud services in India, which was valued at approximately $8.3 billion in 2023 and projected to reach a staggering $24.2 billion by 2028, according to the International Data Corporation. This growing market, however, has been predominantly occupied by foreign players, prompting the RBI to create homegrown solutions that cater specifically to the needs of local financial institutions.
Sources familiar with the initiative have revealed that the pilot program will be rolled out in phases over the coming years. An initial foray will concentrate on smaller banks and financial services firms, many of which struggle to afford existing cloud offerings. By designing its cloud service with input and consideration for these entities, the RBI is not just enhancing accessibility but is also promoting inclusivity within the financial sector.
Moreover, the RBI’s governor, Shaktikanta Das, had earlier mentioned the vision of establishing a public cloud platform intended for the financial industry. While details of the project were previously undisclosed, it has sparked considerable interest from Indian IT firms eager to contribute. The endeavor is being spearheaded by IFTAS, the research wing of the central bank, in collaboration with potential private sector technology partners, ensuring that local expertise drives innovation.
A significant aspect of this initiative is its emphasis on data localisation, reflecting the central bank’s relentless push towards the localization of payments and financial data. By procuring services only from companies incorporated within India, with proven track records in cloud technology, the RBI aims to create a framework that not only secures data but also nurtures the growth of local technology firms.
The procurement strategy indicates that interested companies must either apply independently or as part of a consortium, committing to establish data centers in pivotal cities like Mumbai and Hyderabad. By bringing cloud services closer to the financial hubs of the country, the RBI is fostering a more secure and efficient operating environment for financial transactions and data management.
Initial funding for the ambitious project will flow from the RBI’s asset development fund, which is approximately valued at ₹229.74 billion (around $2.72 billion). As the project progresses, the central bank has indicated intentions to invite financial firms to invest through equity participation. This approach not only secures financial backing but also extends ownership and accountability, promoting a sense of collective responsibility amongst stakeholders.
Consultancy firm EY has been brought on board as an advisor for this project, ensuring that sound strategic planning and industry best practices inform the development of the cloud platform. The collaboration with such significant advisory roles underscores the commitment to creating a robust and scalable cloud service that can meet the evolving demands of the financial sector.
The RBI’s initiative represents a vital forward step in ensuring that India’s financial services sector remains competitive and resilient amidst the changing digital landscape. As global technology trends continue to evolve, this mandatory pivot towards localized cloud solutions not only fortifies the data infrastructure but also empowers local firms to thrive in a digital-first world. With strategic partnerships and innovative technology at its core, this initiative may very well set the stage for a new era of financial services in India, ultimately benefiting consumers and businesses alike.