ECONOMY

RBI Issues Outsourcing Guidelines For Payment System Operators

The Reserve Bank of India issued a new framework for outsourcing of activities by payment system operators. The regulator also reiterated that despite any outsourcing, the responsibility of any breaches or malpractices will lie with the operator and not the entity to which operations have been outsourced.

“The Payment System Operators (PSOs), by virtue of services they provide and the construct of models on which they operate, largely outsource their payment and settlement-related activities to various other entities,” the RBI said in its circular on Tuesday.

It laid down guard rails on what activities can and cannot be outsourced, while also asking that the role of board be strengthening in outsourcing policies.

Key guidelines introduced by the RBI include:

  • PSOs shall not outsource core management functions including risk management, internal audit, compliance and decision-making functions.

  • PSOs shall carefully evaluate the need for outsourcing critical processes and activities.

  • Outsourcing of any activity shall not reduce the liability of the PSOs, its board and senior management.

  • Outsourcing shall not affect the rights of the consumers against the PSOs.

  • A PSO must have a board-approved framework for outsourcing of any payments related activity.

  • The board must undertake periodic review of the outsourcing policies, strategies and arrangements.

  • The management must ensure independent review and audit of set policies.

  • A central record of all outsourcing arrangements must be maintained and made readily accessible to the board and management.

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