RBI warns of risks from cross-border outsourcing of IT services

The Reserve Bank of India (RBI) has warned of risks from cross-border outsourcing of information technology (IT) services and recommended that regulated entities closely monitor such operations.

“To manage such risks, the regulated entity shall closely monitor the government policies of the service provider’s country and its political, social, economic and legal conditions on a continuous basis, and establish sound procedures for mitigating the country risk,” the central bank said in its draft master direction on outsourcing of IT services.

The RBI’s observations come at a time when it is considering a mandate for domestic processing of payment transactions in order to ring-fence India’s local payment systems.