RBI Proposes Tough Guidelines On Outsourcing Of Work By NBFCs

11 April, Mumbai

RBI has proposed tough guidelines regarding outsourcing of work by Non-Banking Financial Companies, NBFCs, to ensure that their recovery agents do not resort to intimidation or harassment of borrowers.

RBI’s draft guidelines on ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services’ were issued in Mumbai Friday.

These guidelines further propose that NBFCs should not outsource core management and decision-making functions, including internal audit and ensuring adherence to KYC compliance norms.

RBI has said that an NBFC intending to outsource any of its financial activities should put in place a comprehensive outsourcing policy, approved by its Board.

Further, NBFCs should retain ultimate control of the outsourced activity and outsourcing arrangements should not affect the rights of a customer. While outsourcing the work, NBFCs should evaluate and guard against strategic risks, reputation risks, compliance risk, operational risk and legal risk, among others.

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