RBI release new outsourcing norms for NBFCs
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In a notification on its website on Thursday RBI issued fresh directions on managing risks and code of conduct in outsourcing of financial services by NBFCs. “Access to customer information by staff of the service provider shall be on 'need to know' basis i.e., limited to those areas where the information is required in order to perform the outsourced function,” RBI said. These norms have to be complied with in the next two months.
NBFCs have to ensure that service providers are able to isolate and clearly identify the NBFC's customer information, documents, records and assets to protect the confidentiality of the information. Any leakage of confidential customer related information should be reported to the central bank immediately, RBI said adding that NBFCs would be liable to its customers for any damages.
A board approved code of conduct for direct sales and recovery agents should also be put in place. “The NBFC and their agents shall not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors' family members, referees and friends, making threatening and anonymous calls or making false and misleading representations,” RBI said.
In case NBFCs are sharing back-office, service arrangements with other group entities there should be a clear demarcation of resources like premises and personnel. “Moreover the customers shall be informed specifically about the company which is actually offering the product/ service, wherever there are multiple group entities involved or any cross selling observed,” RBI said.
NBFCs also have been asked to constitute a grievance redressal machinery with the name and contact details of the redressal officer displayed prominently at their branches. “It shall be clearly indicated that NBFCs' grievance redressal machinery will also deal with the issue relating to services provided by the outsourced agency,” RBI said.
NBFCs would also be responsible for making currency transaction reports and suspicious transactions reports to the financial intelligence unit for activities carried out by the service providers. #casansaar (Source - EconomicTimes)
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