RBI Proposes Tighter Data Governance Norms For Banks, NBFCs; Seeks Feedback Till Aug 17

New Delhi, Jul 17 (KNN) The Reserve Bank of India (RBI) has proposed a comprehensive data governance framework to enhance how banks and financial institutions manage data risks. 

The draft guidelines require regulated entities to integrate data governance into their overall risk management systems, recognising data as a critical organisational asset.

The central bank has invited public feedback on the proposal until August 17.

Wide Applicability Across Financial Sector

The proposed framework will apply to a broad set of regulated entities, including commercial banks, small finance banks, payments banks, cooperative banks, regional rural banks, non-banking financial companies (NBFCs), asset reconstruction companies and credit information companies.

Focus on Data Quality, Security and Accountability

The draft outlines regulatory expectations covering governance structures, roles and responsibilities, data architecture, metadata, data quality and third-party data-sharing arrangements. It emphasises the need for data to remain accurate, consistent, secure and reliable across all business functions.

The RBI noted that weaknesses in data governance could expose institutions to financial, operational, compliance and reputational risks.

Board-Level Oversight Proposed

Under the framework, regulated entities will be required to establish a formal Data Governance Framework covering the entire data lifecycle. The RBI has proposed that oversight be handled at the board level, either through a dedicated data governance committee or an existing board committee.

These committees would be responsible for approving policies, monitoring implementation, reviewing breaches and reporting key issues to the board.

‘Single Source of Truth’ for Data

A key provision in the draft is the requirement for a ‘single source of truth’ for each data element, ensuring that all systems and processes rely on a consistent and authoritative dataset.

Rising Importance of Data Governance

The RBI highlighted that the growing volume and complexity of data—driven by digital financial services, advanced analytics and interconnected systems—has made robust data governance essential. 

The framework draws on global best practices, including principles set by international regulatory bodies.

(KNN Bureau)