The Reserve Bank of India (RBI) on April 10, 2023, issued the Master Direction on Outsourcing of Information Technology Services
This Master direction shall come into force on October 01, 2023
The following has been stated namely: -
• It states that the underlying principle of these Directions is to ensure that outsourcing arrangements neither diminish REs ability to fulfill its obligations to customers nor impede effective supervision by the RBI
• It states that with respect to existing outsourcing arrangements that are already in force as of the date of issuance of this Master Direction, the REs shall ensure that:
i. the agreements that are due for renewal before October 01, 2023, shall comply with the provisions of these Directions as on the renewal date (preferably), but not later than 12 months from the date of issuance of this Master Direction.
ii. the agreements that are due for renewal on or after October 01, 2023, shall comply with the provisions of these Directions as on the renewal date or 36 months from the date of issuance of this Master Direction whichever is earlier.
• It states that the REs shall ensure that their rights and obligations and those of each of their service providers are clearly defined and set out in a legally binding written agreement.
• It states that the Outsourcing of IT Services policy shall contain a clear exit strategy with regard to outsourced IT activities/IT-enabled services while ensuring business continuity during and after exit. The strategy should include an exit strategy for different scenarios of exit or termination of services with the stipulation of a minimum period to execute such plans, as necessary
• The Master direction is enclosed herewith
[Circular No. RBI/2023-24/102 DoS.CO.CSITEG/SEC.1/31.01.015/2023-24]
