Banks Face Penalties for Facilitating Online Money Gaming Under New Act

The MeitY has notified the rules for the promotion and regulation of online games, which are set to become operational from May 1, 2026. This development marks the full implementation of the Online Gaming Act enacted in late 2025.

Krishnan detailed the specific compliance obligations now resting on the financial sector. He noted that the role of banks and financial institutions has been clearly outlined regarding their expected participation in facilitating or blocking transactions.

"The banks and the financial institutions, as you're aware, under the Act, there are provisions which say that anybody who participates in promoting this activity or providing financial transactions for such activity will also be guilty of an offence under the original Act. So the role of the banks and the financial institutions has been spelt out as to what is expected of them in terms of facilitating this. There are no financial transactions relating to an online money game or an online social game, so there's no issue at all. Otherwise, they will have to examine whether the game has been determined to be an online social game or not," Krishnan said.

The Secretary explained that the new rules fundamentally prescribe the procedures by which the provisions of the Act will come into force. Under the new legal landscape, money games are banned completely across the country, while online social games and e-sports are permitted to operate.

"Today, the Ministry of Electronics and Information Technology notified the promotion and regulation of online games rules 2026. These will come into effect from the 1st of May 2026. With that, the Online Gaming Act, was enacted during 2025, and it will also come into operation late in 2025. The rules fundamentally prescribe the procedures by which the provisions of the Act will come into force. As you are aware, under the Online Gaming Act, money games have been banned completely in India and online money games are no longer permitted," Krishnan said.

To manage this distinction, the government has established an authority to determine the classification of various games. While the government aims for a regulation-light approach to reduce the compliance burden on the industry, registration for e-sports remains mandatory. The authority has been expanded to include six members, including representation from the Ministry of Home Affairs and the Department of Financial Services.

"Online social games and e-sports are permitted and are to be promoted as an activity which both promotes innovation and provides employment. So on that basis, certain provisions to decide as to whether a particular game is an online money game or not, and whether it is an e-sport, or an online social game, those provisions and those procedures have been prescribed," Krishnan added.

Determination -- the process of classifying a game as a social game, money game, or eSport -- will now only be triggered in three situations: on suo motu action by the authority, on application by an eSport provider, or when the central government specifically notifies a category of games for review.

The operational matters detailed in the rules include the specific procedures for registration, as well as the protocols for the cancellation or suspension of such registrations. This framework allows the Act to become fully operational while providing a 90-day window for the determination process once it is triggered by the authority or an e-sport provider.

- ANI