December 13, 2005
In the run up to the WTO meeting in Hong Kong, the International Herald Tribune carries a detailed analysis of India’s changing stance on trade negotiations. Instead of being treated as a “poor country” and bundled with the colonies, the Indian trade delegation is asking the West to open up its doors to the outsourcing industry and allow freer movement of services across borders.
December 7, 2005
The RBI has come out with a set of draft guidelines regulating the manner in which banks can outsource financial services. RBI approval is required if the bank intends to outsource the financial services outside the country but a bank cannot outsource to a country where it does not have a branch. Certain core banking services such as corporate planning, organisation, management and control and decision making functions such as determining compliance with know your customer norms may not be outsourced.
The RBI will review the bank’s compliance with these guidelines during its annual financial audit.
If a bank is planning to outsource its financial services, it is required to put in place a comprehensive board approved outsourcing policy that addresses issues like criteria for the selection of the provider, delegation of authority and review. 9 key risk areas have been identified and the bank is required to evaluate these risks before outsourcing its services.
The guidelines also stipulate in some detail, what terms need to be included in the outsourcing agreement. Of particular relevance is the requirement to ensure customer data confidentiality and to establish service provider liability in the event of a breach of security and any leakage of customer information.