The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Rural Co-operative Banks – Managing Risks in Outsourcing) Directions, 2025.
The following has been stated namely: -
• It states that the board shall approve a comprehensive outsourcing policy to ensure critical operations remain under bank control.
• Core functions such as policy formulation, internal audit, compliance, credit sanctioning, and investment management cannot be outsourced.
• Banks shall implement a risk management framework to identify and mitigate strategic, operational, compliance, and reputational risks from outsourcing.
• Service providers shall undergo due diligence, with ongoing monitoring to ensure compliance and performance.
• Outsourcing arrangements shall include data security, confidentiality, exit strategies, contingency plans, and a grievance redressal mechanism for customers.
• This shall come into force from November 28, 2025.
[Notification no. - RBI/DPR/2025-26/318 DOR.ORG.REC.No.237/21-04-158/2025-26]
