RBI outlines a strategy for banks to outsource their IT services.

Reserve Bank of India releases draft Master Direction on Outsourcing of IT Services . The central bank said they have been leveraging IT and IT-enabled services to enhance their business models and services offered to clients .

The Reserve Bank of India (RBI) released a draft Master Direction on Outsourcing of IT Services to ensure proper handling of risks in the outsourcing of IT services by banks, non-banking financial firms, and other regulated entities, and the central bank said that they have been leveraging IT and IT-enabled services to enhance their business models and services offered to their clients, and that they also outsource a significant portion of their IT activities to third parties, exposing the entities to significant risks.The RBI has expressed doubts about the importance of outsourcing, stating that such arrangements should not impede effective oversight by the supervisory authority, the draft said.Further, the regulated entities must examine the importance of outsourcing by conducting an exhaustive study of the benefits, costs, and risks associated with it, and should also identify the best way to address such risks.This may include, among other things, having appropriate contingency and exit strategies.

Lastly, the Outsourcing of IT Services policy should outline a clear exit strategy for outsourced IT activities or IT-enabled services while maintaining business continuity throughout and after departure.