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Highlights of RBI Annual Report 2025-26 – Chapter 6 (Part II)

Reserve Bank of India (RBI) has published its annual report for the financial year 2025-26. In a series of articles, we will go through the highlights of the report. This is the fourth article in the series. 

Chapter 6 – Regulation, Supervision and Financial Stability (Part II)

  • Central Bank Digital Currency (CBDC) –
    • User-level programmability was introduced in the retail segment of CBDC, enabling individual users to send programmable money to other individuals. 
    • Multiple government agencies commenced pilots in various direct benefit transfer (DBT) schemes leveraging the programmability feature of CBDC.
    • In Gujarat, Puducherry and Chandigarh, public distribution system (PDS) beneficiaries were credited food subsidy through programmable CBDC, redeemable for eligible commodities at fair price shops / identified merchants. 
    • Bharat Interface for Money (BHIM) has been enabled to discover existing CBDC wallets. 
    • On cross-border payments, the RBI signed a memorandum of understanding (MoU) on digital asset collaboration with the Monetary Authority of Singapore (MAS). 
    • Bilateral discussions with MAS and the Central Bank of the UAE (CBUAE) were held for operationalising a cross-border CBDC pilot. 
    • The RBI also joined multilateral BIS-Innovation Hub-led initiatives, viz., Project Rialto, and Phase 2 of Project Mandala, which are focused on enhancing cross-border payments through CBDCs.
    • In case of offline CBDC, both proximity-based (Near Field Communication) and non-proximity-based (SMS) solutions are being tested. 
    • In the wholesale segment, the existing pilots on secondary market trades settlement of Government Securities (G-Secs) and inter-bank borrowing segment were expanded. 
    • The RBI announced the launch of RBI CBDC and Asset Tokenisation (CAT) Sandbox and Unified Markets Interface (UMI) during the Global Fintech Festival 2025. 
    • CAT Sandbox will enable entities to access test environments for developing, testing and demonstrating innovative CBDC and tokenisation use cases, applications, and value-added solutions. 
    • Under UMI, certificates of deposit (CDs) were the first instrument to be issued in tokenised form and settled through wholesale CBDC.
  • Important projects undertaken through Reserve Bank Innovation Hub (RBIH), a wholly owned subsidiary of the RBI –
    • MuleHunter.aiTM
    • Unified Lending Interface (ULI)
    • Digital Payment Intelligence Platform (DPIP)
    • FinTech and Emerging Technologies (EmTech) repositories
  • MuleHunter.aiTM 
    • It leverages a diverse set of behavioural and transactional features derived from real-world fraud patterns developed based on ecosystem level learnings, to assign a confidence score (i.e., probability) to each bank account, indicating its likelihood of being a mule. 
    • The course of action, post assigning the confidence score of a suspected mule account by MuleHunter.aiTM, rests with the individual banks, based on their internal assessments and conduct of enhanced due diligence procedures.
    • As on March 31, 2026, it has been implemented in 26 banks. Implementation is underway in 4 more banks, with a plan to further scale it to more banks. 
  • Unified Lending Interface (ULI) 
    • It is an enterprise-grade open architecture platform that ensures digital access to information from diverse data sources available on the platform, and acts as a pivotal Digital Public Infrastructure (DPI) in the lending space. 
    • These datasets facilitate frictionless formal credit access for vulnerable sections of society.
    • In addition to expanding the scope of ULI, the platform usage was enhanced through onboarding of more lenders and data service providers. The development of a B2C (customer-facing) application is also underway.
  • Digital Payment Intelligence Platform (DPIP) – 
    • It is envisaged to strengthen fraud risk management in the digital payment ecosystem. 
    • In the first phase of DPIP, a smart registry is being developed based on suspicious / fraudulent transactions reported by banks, which will prevent onboarding of non-bona fide actors. 
    • In the second phase, an AI/ML based model will be developed using past transactions data to provide banks a real-time transaction-wise risk score for deciding their suitable course of action. 
    • 7 banks have been onboarded to Phase I of the DPIP pilot as on March 31, 2026.
  • FinTech and Emerging Technologies (EmTech) repositories –
    • RBIH operates EmTech repositories that capture essential information about FinTech entities and function as a sector-wide repository for monitoring FinTech evolution. 
    • To make the repositories user-friendly and offer different functionalities, various upgrades were made, including mobile view and ‘Connect Feature’, wherein FinTechs can connect with ecosystem players such as banks, investors, and incubators, and vice versa, in a consent-based framework. 
    • As on March 31, 2026, the number of FinTechs and regulated entities (REs) onboarded on FinTech and EmTech repositories stood at 693 (950 registrations received) and 33 (86 registrations received), respectively.
  • Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) Committee 
    • The FREE-AI Committee was constituted by the RBI on December 26, 2024, which submitted its report on August 13, 2025. 
    • The report of the FREE-AI Committee sets out the framework to guide the use of AI in the financial sector, aiming to harness its potential while safeguarding against associated risks. 
    • At the core of the framework are 7 sutras which articulate the foundational principles for AI development, deployment, and governance. 
    • The framework is structured around 6 strategic pillars – (i) infrastructure; (ii) policy; (iii) capacity to enable innovation; (iv) governance; (v) protection; and (vi) assurance to address risk. 
    • Using the sutras as guidance, the Committee has called for a dual focus approach – fostering innovation while ensuring effective risk mitigation. 
    • Across these 6 pillars, the Committee has set out 26 recommendations, 13 each on innovation enablement and risk mitigation.
  • 4th edition of the RBI’s Global Hackathon – ‘HaRBInger – Innovation for Transformation’ –
    • Theme – Secure Banking: Powered by Identity, Integrity and Inclusivity
    • Problem statements – 
      • Tokenised Know Your Customer (KYC) 
      • Offline CBDC (e₹) 
      • Enhancing Trust
  • Regulatory Sandbox (RS) – 
    • The RBI has been operating the RS framework since 2019, under which 5 cohorts have been completed as on March 31, 2026. The 5 cohorts are –
      • Retail Payments
      • Cross-border Payments
      • Micro, Small and Medium Enterprises (MSME) Lending
      • Prevention and Mitigation of Financial Frauds
      • Theme Neutral
    • The ‘On-Tap’ application facility under the RS, which was earlier available only for closed themes, has now been expanded to accept ‘Theme Neutral’ applications for testing any product or service falling within the regulatory domain of the RBI. 
  • The RBI continued regular engagement with the FinTech ecosystem through 2 structured monthly platforms, ‘Finteract’ and ‘Finquiry’. 
    • ‘Finteract’ sessions are conducted across various cities and regions for a dedicated discussion with the local FinTech entities.
    • ‘Finquiry’ provides a forum at the FinTech Department, RBI, Mumbai for FinTechs to seek clarity or discuss any matter of relevance.
  • Cyber Range initiative –
    • To enhance cyber resilience across the supervised entities (SEs), the RBI has operationalised the Cyber Range initiative through a ‘state-of-the-art’ platform deployed at the Institute for Development and Research in Banking Technology (IDRBT). 
    • The platform facilitates cyber drill exercises based on simulated scenarios, including incidents observed or reported across SEs.
  • Deposit insurance –
    • The RBI has introduced a ‘Risk Based Premium (RBP) Framework’ for deposit insurance, in terms of the provision under Section 15(1) of the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961, which provides for differential premium rates for different categories of insured banks. 
    • Effective April 1, 2026, the framework, inter alia, provides for a two-tier risk-based rating methodology for Tier 1 banks [scheduled commercial banks (SCBs) other than regional rural banks (RRBs)] and Tier 2 banks [RRBs, rural co-operative banks and urban co-operative banks (UCBs)]. 
    • It also extends benefits of vintage discount, signifying longer contribution to DICGC’s deposit insurance fund (DIF) without any major stress events or claim payouts from DICGC. 
    • Accordingly, better managed banks shall pay lower premium than the present premium rate of 12 paise per ₹100 of assessable deposits per annum.
    • With effect from April 1, 2026, the banks are required to disclose in the annual report that ‘deposit insurance premium as applicable was paid to DICGC within the prescribed timelines’ or otherwise.


References

Reserve Bank of India. (2026, May 29). 'RBI Annual Report 2025-26'. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?year=2026


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