India’s central bank, the Reserve Bank of India (RBI), has revealed plans to impose new rules on its financial services for IT outsourcing.
Within the rules guidelines, management of outsourcing-related concentration risks and periodic assessments of foreign IT service providers will be addressed under the guidelines title name ‘Master Director on Outsourcing of IT services’.
These new imposed rules come after multiple technical glitches with India’s banking market as concerns began to grow on the dependency for third-party service providers.
The RBI stated: “Regulated Entities (REs) have been extensively leveraging Information Technology (IT) and IT-enabled services (ITeS) in their business, products and services with increasing dependence on third parties,”
“Such reliance on IT/ITeS provided by third parties exposes the REs to various risks.”
Guidelines of the new rules outlines that the underlying principle of these Directions is that the REs should ensure that outsourcing arrangements neither diminish its ability to fulfil its obligations to customers nor impede effective supervision by the supervising authority.”
Banks across India have been handed a deadline of 22 July to submit responses to the new rules.