1. INTRODUCTION
The Reserve Bank of India ("RBI") on
April 10, 2023, issued the Reserve Bank of India (Outsourcing of
Information Technology Services) Directions, 20231
("Directions") to govern and regulate
Information Technology ("IT") services
outsourced by Regulated Entities (as defined and listed
below). The need for the Directions emanated from the
Statement on Developmental and Regulatory Policies dated February
10, 20222, which stated that owing to the increasing
dependency of customers on digital channels to avail banking
services, there is a need for Regulated Entities to get easier
access to newer technologies, by leveraging and outsourcing
critical IT services to financial technology players, to ensure
improved efficiencies while Regulated Entities can continue to
focus on operational resilience. While the RBI acknowledges the
need for outsourcing IT functions by Regulated Entities, the
RBI's concerns are around the various risks that stem from
