Non-banking financial companies (NBFCs)
cannot outsource core management functions like internal audit, strategic and compliance functions for know your customer (KYC) norms, sanction of loans and management of investment portfolio.
RBI issued fresh directions on managing risks and code of conduct in outsourcing of financial services by NBFCs. As per the notification, access to customer information by staff of the service provider shall be on ‘need to know’ basis i.e., limited to those areas where the information is required in order to perform the outsourced function.
NBFCs have to ensure that service providers are able to isolate and clearly identify the NBFC’s customer information, documents, records and assets to protect the confidentiality of the information. Any leakage of confidential customer related information should be reported to the central bank immediately otherwise NBFCs would be liable to its customers for any damages.
A board approved code of conduct for direct sales and recovery agents should also be put in place.
Static/Current Takeaway Points Important for IBPS PO Mains 2017 Exam-
- Urjit Patel- 24th Governor of RBI, Headquarter- Mumbai.
Source-The Economic Times