Reserve Bank of India (All India Financial Institutions – Managing Risks in Outsourcing) Directions, 2025

1. Deadline for existing deals

Existing IT outsourcing deals must follow these rules by April 10, 2026, or renewal, whichever comes first.

2. Outsourcing rules

This document sets the outsourcing rules for all India financial institutions.

3. Start date

These Directions came into effect on the day the Reserve Bank issued them.

4. Who is covered

These Directions apply to every all India financial institution.

1. Responsibility cannot be outsourced

An all India financial institution cannot outsource its duty. The all India financial institution and its Board stay fully responsible for each outsourced IT service.

1. Nothing deleted in transition

The provider may not wipe or change data while the work is being moved.

2. Weigh the IT case

The case for giving out an IT job must be weighed against its risks.

3. A framework for IT risk

A risk plan must cover how IT risks are found, sized and reported.

4. Too much with one provider

The lender must weigh the risk of leaning on one provider too much.

5. Guard the customer data

Customer data held by the provider must be kept safe.

6. Watch their security

The lender must check the provider's safety steps often, and note any breach.

BankPulse example. A bank hires an outside firm to host its records. Signing the contract is not the end of it. The bank must review and monitor that provider's security practices and control processes on a regular basis.

7. Due diligence each renewal

The provider must be checked when hired and again at each renewal.

BankPulse example. A bank's outsourcing arrangement comes up for renewal after three years. Due diligence is done again, not only when it was first signed. The question each time is whether the service provider can still meet the obligations.

8. Look outside as well

Outside reviews and market feedback should back up our own checks.

BankPulse example. A bank's own checks on a provider are not the whole picture. It also obtains independent reviews and market feedback on that service provider. Those supplement the findings of its own due diligence.

9. Put it in writing

What each side owes the other must be set out in a written deal that binds.

10. Lawyer must vet it

A lawyer must check the written deal and say it will hold.

11. Room to step in

The deal must leave room to step in to meet the law.

12. Say what the relationship is

The deal must say whether the tie is agent and principal, or not.

13. A structure to watch it

There must be a team in place to watch and steer the work given out.

14. Audit the provider

The lender must audit the provider and anyone it hires.

15. Report any slippage

The review must bring out any drop in service, secrecy or safety.

16. An inventory of IT services

The lender must keep a list of the IT jobs it has given out.

17. Map the dependency

The lender must map how much it leans on outside firms.

18. Continuity must be tested

The provider must write down, keep and test its plans to keep work going.

19. Name the alternative

The exit plan must identify who else could do the work, or whether it comes back in-house.

20. Destroy the data safely

The deal must say how data and records are to be wiped or destroyed.

21. Announce the ending

Where a provider dealt with customers, the end of the deal must be made known.

22. Group choice on merit

A group firm must be picked on the same plain grounds as an outside firm.

23. Arm's length always

The lender must always deal with group firms at arm's length.

24. Watch the host country

Where a provider is abroad, its country's rule and politics must be watched.

25. Need to know only

A provider's staff may see customer data only where the job needs it.

26. Joint vendor audits

CICs using the same vendor can share one joint audit instead of separate ones.

27. Risk sets the audit cycle

How often the audit happens turns on the risk and what is at stake.

28. Board hears the bad news

Reports go to senior staff, and anything bad goes up to the Board.

29. Complaint responsibility

The all India financial institution alone is responsible for fixing complaints about outsourced services.

1. Old cases continue

Action already taken under the old rules stays governed by them.