The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (All India Financial Institutions – Managing Risks in Outsourcing) Directions, 2025.
The following has been stated namely: -
• The RBI has issued comprehensive guidelines for outsourcing arrangements, which affirm that regulated entities retain ultimate accountability for outsourced functions and shall ensure that outsourcing does not impair their ability to meet obligations to customers or impede effective supervision by the regulator.
• The guidelines emphasise that core management and decision-making functions (such as internal audit, compliance, portfolio management, and credit approvals) shall remain within the regulated entity and cannot be outsourced.
• They require robust due diligence, contract governance, monitoring, and termination provisions with third-party service providers, including detailed oversight of material outsourcing arrangements, which could impact operations, reputation, or profitability.
• The guidelines further stipulate that entities must maintain appropriate information security, business continuity, exit strategies, and oversight of subcontractors, while ensuring transparency, risk management, and regulatory access to books and records.
• The framework generally applies to all material outsourcing arrangements entered into by a regulated entity, whether with domestic or overseas service providers.
• This shall come into force from November 28, 2025.
[Notification no. - RBI/DOR/2025-26/337 DOR.ORG.REC.No.256/21-04-158/2025-26 ]
