RBI Modernizes Digital Payment Security: SMS OTP Retained, New Authentication Framework by April 2026

The Reserve Bank of India (RBI) today unveiled its draft framework on alternative authentication mechanisms for digital payment transactions, reaffirming that SMS-based OTP will remain a valid method of authentication. Contrary to speculation, the RBI clarified that the framework does not mandate discontinuation of OTPs but aims to broaden the security toolkit available to payment operators and users.

 

Key Highlights:

Compliance Timeline:

Payment system participants, including banks and non-banks, must comply with the new framework by April 1, 2026, unless otherwise specified.

 

Strategic Implications:

Sources: RBI Press Release, Economic Times BFSI, TaxGuru.