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ARTICLE · 04 MAY 2023

RBI Overhauls Bank IT Outsourcing Norms

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Banks and financial institutions rely on cutting edge information technology solutions to provide services to their clients, and also to keep up with innovations driven...

IndiaEmployment and HR
Vikram Jeet Singh
Vikram Jeet Singh
Arjun Paleri
Arjun Paleri
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Banks and financial institutions rely on cutting edge information technology solutions to provide services to their clients, and also to keep up with innovations driven by fintechs and FinServ start-ups. Outsourcing IT services is widespread in banks, as it is in most other sectors of the economy. Central banks and regulators have long sought to balance the risks of IT outsourcing with benefits in efficiency and cost-savings.

The Reserve Bank of India ("RBI") notified a much anticipated overhaul of bank IT outsourcing regulations on April 10, 2023. These are the Master Direction on Outsourcing of Information Technology Services, bearing no. RBI/2023-24/102 ("Directions").

These Directions follow an extensive consultation process, that saw the RBI issue draft rules and invite public comments during 2022. The stated underlying principle of these Directions is to ensure that outsourcing arrangements neither diminish banks' and other regulated entities' ("RE") abili

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