Banks May Face Rising Competition And Compliance Costs Under RBI Payments Vision 2028: EY

New Delhi, Jun 17 (KNN) The Reserve Bank of India's (RBI) Payments Vision 2028 is set to bring both opportunities and significant challenges for banks, as they are forced to adapt to a more competitive and technology-driven payments landscape, according to a report by Ernst & Young (EY).

The RBI introduced the initiative in March 2026 under the theme ‘Shaping India's Payment Frontier’, proposing measures that include expanding customer control over digital payment modes, a unified application process and dedicated reporting on cross-border transactions.

Stiffer Competition, Higher Costs

One of the more consequential proposals is the Payments Switching Service (PaSS), which would allow customers to switch payment service providers or bank accounts with minimal friction. 

EY said this is expected to intensify competition among banks, with customer retention increasingly dependent on service quality and user experience rather than structural inertia, Moneycontrol reported, citing the report.

The report also flags the RBI's Shared Responsibility Framework (SRF) for unauthorised digital transactions as a key risk factor. Under this framework, liability for unauthorised transactions would be shared between the beneficiary bank and the issuer bank. 

EY warned that beneficiary banks in particular may need to invest heavily in continuous transaction monitoring to manage this expanded liability exposure.

Opportunities in Cross-Border Payments and AI

On the positive side, EY sees meaningful growth potential in cross-border payments, MSME financing and interoperability. 

Proposed measures including a single-window authorisation process under the Payment and Settlement Systems (PSS) Act and the Foreign Exchange Management Act (FEMA) could reduce friction for banks involved in remittances, trade finance and international payment services.

The RBI's push toward AI-driven oversight is also seen as an opportunity, with banks able to use macro-data insights to improve liquidity forecasting, risk management and customer analytics. However, these gains are likely to come with higher technology investment and expanded reporting obligations, EY noted.

(KNN Bureau)