ANI
24 Jun 2022, 15:55 GMT+10
New Delhi [India], June 24 (ANI): In order to ensure effective management of risks in outsourcing of IT activities by banks, non-banking financial companies, and other regulated entities, the Reserve Bank of India issued a draft 'Master Direction on Outsourcing of IT Services'.
Regulated entities have been extensively leveraging IT and IT-enabled services to support their business models and products and services offered to their customers, and they also outsource a substantial portion of their IT activities to third parties, which exposes the entities to significant risks, the central bank said.
The draft has been released for comments of stakeholders and members of the public. The last date for comments and feedback is July 22, 2022The draft said that the underlying principle is that the regulated entities should ensure that outsourcing arrangements neither diminish their ability to fulfill their obligations to customers nor impede effective supervision by the supervising authority.
Regulated entities desirous of outsourcing IT and IT-enabled services shall not require prior approval from the RBI, said the draft, adding that such arrangements, however, shall be subject to on-site or off-site monitoring and inspection and scrutiny by the supervising authority.
Further, the draft said that the regulated entities shall evaluate the need for outsourcing of IT services based on a comprehensive assessment of attendant benefits, risks, and availability of commensurate processes to manage those risks.
In this process, they shall consider important aspects, such as determining the need for outsourcing based on the criticality of the activity to be outsourced, determining expectations or outcomes from outsourcing, determining success factors and cost-benefit analysis, and deciding the model for outsourcing.
On grievance redressal mechanism, the draft said responsibility for redressal of customers' grievances related to outsourced services shall rest with the regulated entities.
The RBI has shown concerns about risks attached to cross-border outsourcing, saying that the engagement of a service provider based in a different jurisdiction exposes to risk.
"To manage such risk, the regulated entity shall closely monitor the service provider's country's government policies and its political, social, economic and legal conditions on a continuous basis, and establish sound procedures for mitigating the country risk. This includes, inter alia, having appropriate contingency and exit strategies. Further, it shall be ensured that availability of records to the regulated entity and the supervising authority will not be affected even in case of liquidation of the service provider," the draft said.
Lastly, the draft said the Outsourcing of IT Services policy shall contain a clear exit strategy with regard to outsourced IT activities or IT-enabled services while ensuring business continuity during and after exit. (ANI)
Get a daily dose of Dublin News news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Dublin News.
More InformationDELFT, Netherlands: IKEA officials said this week that the furniture retailer's warehouses in Europe are as full as they were ...
NEW YORK CITY, New York: After the first six months of 2022, the S&P 500 recorded a loss of 20.6 ...
WASHINGTON D.C.: Due to the record high trade deficit and a resurgence in COVID-19 infections that curbed spending on services, ...
TAIPEI, Taiwan: The world's fourth largest chip designer by revenue, Taiwan's MediaTek, has told Reuters that it plans to create ...
NEW YORK, New York - U.S. stocks rebounded on Friday, a day after major across-the-board sell-offs."Consensus estimates for 2022 and ...
GENEVA, Switzerland: Swiss pharmaceutical group Novartis has said, as part of its previously announced restructuring program, that it could cut ...
LONDON, England: A second referendum on Scottish independence is set to be held in October 2023. The Scottish government, led ...
BERLIN, Germany: A German Interior Ministry spokesperson has said that in a bid to relieve airports overwhelmed by staff shortages ...
PARIS, France: In a written statement made this week confirming a report from broadcaster RTL, France's energy ministry said the ...
WATFORD, UK: Watford F.C. has cancelled a friendly match against the Qatar national team due to the Gulf country's human ...
JAKARTA, Indonesia: Indonesian President Joko Widodo has said that he will urge his Russian and Ukrainian counterparts to open peace ...
ISTANBUL, Turkey: Turkish police detained dozens of people after local authorities banned Istanbul's annual Pride parade from going ahead this ...