Insight Online News
Mumbai, Aug 5 :The Reserve Bank of India (RBI) on Friday said it will soon bring in rules to ensure outsourcing of business by banks doesn’t expose them to risks.
‘Regulated entities are increasingly using outsourcing as a means for reducing costs as well as for availing expertise not available internally,’ RBI Governor Das said after the post-policy announcement.
‘Although outsourcing of a permissible activity is an operational decision of regulated entities, it exposes them to various risks.’
RBI has issued several directions to banks, NBFCs and housing finance companies on managing risks in outsourcing of financial services.
The central bank now aims to harmonise all the past guidelines, adopt and incorporate global best practices and enable all entities regulated by it to have all current instructions on outsourcing of financial services at one place for reference.
RBI will soon issue draft regulations to manage risks and code of conduct in outsourcing of financial services.
The draft rules will be open to public comments shortly. The scope of the new directions will be expanded to include regional rural banks, local area banks, all-India financial institutions, credit information companies, and non-scheduled payments banks.