The Reserve Bank of India (RBI) is taking a bold step to strengthen India’s financial infrastructure with its 2025 pilot programme to provide affordable local cloud storage to financial institutions. This initiative marks a strategic move by the central bank to offer cost-effective solutions tailored for smaller banks and financial firms, which often struggle with the high costs of services from global giants like Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and IBM Cloud.

A Growing Cloud Market

India’s cloud services market, valued at US$ 8.3 billion (~Rs. 68,890 crore) in 2023, is expected to grow to a staggering US$ 24.2 billion (~Rs. 2,00,860 crore) by 2028. Despite this exponential growth, the market remains heavily reliant on foreign service providers, leaving smaller financial institutions at a disadvantage due to high service costs.

To address this gap, the RBI’s cloud platform will be an affordable, locally developed alternative that prioritizes data security and localisation—aligning with India's broader push for digital sovereignty in the financial sector.

Funded and Developed Locally

The RBI plans to invest its asset development fund of US$ 2.72 billion (Rs. 22,974 crore) into the project. Key partnerships with private-sector technology firms will drive the development of the cloud platform, with EY appointed as an advisor to oversee its execution. Local IT firms with expertise in cloud technologies have been invited to bid for the project, ensuring the platform’s infrastructure is built by Indian talent.

Two data centres will be set up in Mumbai and Hyderabad, serving as the backbone of the RBI’s cloud services network. These centres will ensure secure storage and compliance with localisation norms, providing financial institutions with a dependable alternative to existing global services.

Data Localisation: A Strategic Move

The RBI’s focus on data localisation comes in response to increasing concerns over data sovereignty and the sensitivity of financial information. By storing data domestically, the RBI aims to provide secure and compliant solutions for Indian financial firms, enhancing their resilience against cyber threats and data breaches.

The pilot programme will initially cater to smaller financial institutions, offering them an affordable solution to scale their operations without compromising on data security. Over time, the RBI plans to scale the project, inviting financial institutions to co-invest and hold equity in the initiative, ensuring its long-term viability and growth.

Competing with Global Cloud Providers

While the RBI’s cloud project is primarily aimed at meeting the needs of smaller banks and financial firms, it indirectly challenges the dominance of global players like AWS and Azure. By providing cost-effective, localised solutions, the RBI sets a precedent for India’s digital independence, reducing reliance on foreign cloud services.

Scaling and Future Prospects

The RBI’s initiative will roll out in phases, with the pilot programme starting in 2025. Depending on its success, the project could expand to support larger banks and even non-banking financial companies (NBFCs). With the Indian cloud market poised for growth, this initiative could act as a catalyst for innovation in financial technology (fintech) and data services.

The RBI’s move underscores its commitment to modernising India’s financial ecosystem while aligning with global best practices. As India continues its march toward digital transformation, the initiative is expected to have a lasting impact on the financial sector’s growth and stability.

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