India's central bank will begin a trial program in 2025 that will provide local cloud data storage to financial institutions at reasonable costs. In a first-of-its-kind move by a significant international central bank, the Reserve Bank of India's proposed cloud platform will use local IT companies and compete with companies like Amazon Web Services, Microsoft Azure, Google Cloud, and IBM Cloud.
According to a survey by International Data Corporation, the rapidly expanding cloud services market in Asia's third-largest economy was valued at $8.3 billion in 2023 and is projected to reach $24.2 billion by 2028. However, foreign companies now hold a significant portion of this market.
One of the two sources, a senior executive involved in the project, stated, "We want to start implementing on a smaller scale in the next few months," The source added that the cloud service will be developed with the needs of smaller banks and financial services companies in mind, who find the current options too expensive, and that the pilot will be expanded in stages over the next years.
Shaktikanta Das, the governor of the Reserve Bank of India, revealed plans to establish a public cloud for the financial services sector in December of last year. The Indian Financial Technology and Allied Services, the central bank's research arm, is spearheading the initial cloud development efforts. According to the sources, it will then be further developed in collaboration with one or more technological companies in the private sector.
The initiative now has EY, a consulting firm, as an advisor. According to the second source, the initiative will be financed initially by 229.74 billion Indian rupees ($2.72 billion) from the central bank's asset development fund. The central bank will then allow financial businesses to hold stock.
Importance of Data Localization
Another stage in the central bank's drive to localize financial data and payments is the establishment of a cloud service developed in collaboration with regional IT companies. Furthermore, as per a procurement document posted on the IFTAS website in October, the RBI has only encouraged Indian-incorporated businesses with past expertise developing cloud-related technologies to submit bids for the project.
Businesses must construct up data center facilities in Hyderabad and Mumbai and may apply alone or in a partnership. The number of private players interested in partnering with us is enormous. Both Indian cloud service providers and a sizable number of IT firms have shown interest, the person continued.
Setting up a cloud service in collaboration with local IT firms is another step in the central bank's goal for payment and financial data localization. According to a procurement document released on the IFTAS website in October, the RBI has invited only Indian companies with past experience in developing cloud-related technologies to bid on the project.
Companies can apply alone or as part of a consortium, and are required to establish data center facilities in Mumbai and Hyderabad. "We have a huge amount of interest (from private players looking to partner). A large number of IT firms, as well as Indian cloud service providers, have expressed an interest," the person noted.
