RBI Releases Master Direction To Regulate Outsourcing Of IT Services

Background

The Reserve Bank of India (RBI) has issued a master direction on outsourcing of information technology services by REs (as described below) on 10 April 2023 (Direction). The RBI had published a draft master direction for public feedback on 23 June 2022, pursuant to which the Direction has been released. The Direction aims to mitigate risks (as described below) faced by REs due to material outsourcing of information technology (IT) or IT enabled services as identified under the Direction (collectively, "IT services") to providers of IT or IT enabled services (Service Providers).

Applicability and Scope

The Direction is applicable to regulated entities, namely, all commercial banks, non-banking financial companies, primary co-operative banks, credit information companies, 'All India Financial Institutions' as defined under the Direction (collectively, "REs"). In case of foreign banks operating in India through branch mode, reference to REs' board of