Mumbai: In an attempt to regulate and monitor outsourcing of financial services of banks, the Reserve Bank of India on Wednesday directed them to conduct regular audits. The audits must be conducted by either the internal or external auditors to assess adequacy of risk management practices in overseeing and managing outsourcing arrangement, the central bank said.
Banks will need to check the compliance of the outsourcing partner with its risk management framework and the requirements of these guidelines.
“Banks should at least on an annual basis, review the financial and operational condition of the service provider to assess its ability to continue to meet its outsourcing obligations,” the central bank said. “Such due diligence reviews, which can be based on all available information about the service provider should highlight any deterioration or breach in performance standards, confidentiality and security, and in business continuity preparedness.”