LEGAL AND REGULATORY APPROACHES TO TECHNOLOGY IN BANKING

AUTHOR – SANJANA AGARWAL, STUDENT AT AMITY LAW SCHOOL, NOIDA, UP

BEST CITATION – SANJANA AGARWAL, LEGAL AND REGULATORY APPROACHES TO TECHNOLOGY IN BANKING, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (8) OF 2025, PG. 864-873, APIS – 3920 – 0001 & ISSN – 2583-2344

Abstract

The accelerated introduction of technology in the banking industry has transformed financial services, providing improved efficiency, accessibility, and innovation. In India, various digital initiatives like the Unified Payments Interface (UPI), digital lending platforms, artificial intelligence (AI)-based credit scoring, and blockchain technologies have greatly revamped conventional banking. These development processes have, however, created a series of legal and regulatory issues, such as data privacy and protection, cybersecurity risks, algorithmic discrimination, financial fraud, and regulatory arbitrage.

This article critically reviews the legal and regulatory strategies implemented in India to counter these challenges. It discusses major frameworks and guidelines released by the Reserve Bank of India (RBI), the Ministry of Electronics and Information Technology (MeitY), and other concerned authorities. The study highlights the role of instruments such as the RBI’s digital lending guidelines, regulatory sandboxes, and IT risk management directives in fostering a balance between innovation and regulation. Furthermore, it considers the gaps in existing laws, such as the absence of a comprehensive data protection regime, and evaluates how India can align its policies with global best practices.

Finally, the article advocates a coordinated, responsive, and future-oriented regulatory approach in order to match technological advances in banking with legal protection and institutional strength.