RBI issues detailed norms for outsourcing of IT services by banks, NBFCs

In its 'Master Direction on Outsourcing of Information Technology Services', RBI said that Regulated Entities (REs) have been extensively leveraging IT and IT-enabled Services (ITeS) to support their business models, products and services offered to their customers.

In February last year, the central bank proposed the issuance of suitable regulatory guidelines on outsourcing of IT services with an aim to ensure effective management of attendant risks. Later, draft norms were issued. According to RBI, the underlying principle of the directions is to ensure that outsourcing arrangements neither diminish REs' ability to fulfil its obligations to customers nor impede effective supervision by the central bank.