The Reserve Bank of India (RBI) has recently updated its IT Outsourcing Services policy, introducing a set of revised guidelines to fortify the security and resilience of information technology infrastructure within financial institutions.
This comprehensive policy applies to banks, non-banking financial companies, and other regulated entities, providing them with a framework to streamline their outsourcing processes while ensuring compliance with regulatory requirements.
The revised IT Services policy, which is expected to be implemented by financial institutions by 01-Oct-23, encompasses the following crucial aspects:
1. Comprehensive Board-Approved Policy: Financial institutions are required to develop and maintain a robust policy that is approved by the board. This policy must clearly define the roles and responsibilities of various stakeholders, including the board, senior management, IT function, business function, and oversight and assurance functions.
2. Covered IT Outsourcing Activities: The policy encompasses a wide range of activities, including IT infrastructure management, maintenance and support, network/security solutions, application development, data center services and operations, cloud computing services, managed security services, and payment system management.
3. Selection Criteria for Service Providers: The policy guides financial institutions in establishing criteria for selecting reliable and competent service providers. This ensures that the outsourcing partners meet the necessary requirements and possess the expertise to deliver quality services.
4. Material Outsourcing and Delegation of Authority: Financial institutions must define what constitutes material outsourcing and establish appropriate delegation of authority based on risk and materiality factors. This enables effective oversight and control over outsourced activities.
5. Disaster Recovery and Business Continuity Plans: The policy emphasizes the importance of having robust disaster recovery and business continuity plans in place. Financial institutions must ensure that their outsourcing partners have adequate measures to address potential disruptions and maintain uninterrupted services.
6. Monitoring, Review, and Termination: The policy mandates regular monitoring and review of outsourced operations to assess compliance with contractual obligations, service level agreements (SLAs), and security requirements. Additionally, it outlines the processes for terminating outsourcing arrangements when necessary.