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RBI Master Direction April 2026: What Indian Banks Must Do for AI Now

Published 2026-05-01

What changed

The Reserve Bank of India’s Master Direction on IT outsourcing, effective April 10, 2026, explicitly covers AI and ML systems as regulated IT services. This means any scheduled commercial bank or NBFC deploying AI tools — including AI coding assistants, AI DevOps tools, or AI agent platforms — must demonstrate:

  1. Governance frameworks — documented policies for AI model selection, audit, and risk assessment
  2. Data residency — customer data and model inference must remain within India (ap-south-1 or equivalent)
  3. Audit trails — tamper-proof, 7-year retention of all AI-assisted decisions
  4. Vendor risk assessment — third-party AI providers must be evaluated under the outsourcing framework

Why this creates urgency

Banks that deployed AI tools before April 10, 2026 without governance frameworks now face a compliance gap. The window to remediate is open, but the RBI has signaled that enforcement reviews begin Q3 2026.

How EAIP addresses each requirement

Governance framework

EAIP’s Cedar WASM ACL layer enforces policy-as-code. Every AI agent action is evaluated against explicit Cedar policies before execution. The guard-gate service logs every policy decision — allow or deny — to the WORM audit chain.

Data residency

The model-router service derives region enforcement server-side from the tenant record (tenant.region == 'in'). No client-supplied region flag can override this. All inference routes to AWS Bedrock ap-south-1 or GCP asia-south1. The Supabase instance is provisioned in the India region.

Audit trail (CERT-In compliant)

The trace-store service maintains a SHA-256 hash chain across all batch boundaries. Each entry includes actor, tenant, resource, action, before/after hash, and IST timestamp sourced from time.nplindia.in. Retention is 7 years on ClickHouse with WORM-compatible TTL.

Vendor risk

EAIP gives banks and their regulators full source audit access under NDA, and supports BYOC (data plane in their own VPC with zero data egress) for the highest assurance tier.