RBI’s Outsourcing Framework For Payment And Settlement Activities


The Reserve Bank of India (“RBI”) recently (on August 03, 2021) issued Circular CO.DPSS.POLC.No.S-384/02.32.001/2021-2022 (“Outsourcing Circular”) with the aim of creating a framework to govern the outsourcing of payment and settlement related activities by Payment System Operators (“PSOs”). The Outsourcing Circular applies to all PSOs, including Prepaid Payment Instrument (PPI) issuers, and prescribes certain essential standards and requirements for any payment and settlement related outsourcing arrangement of a PSO.

Summary and Analysis

Background and Intent

The RBI first announced the issuance of such a framework in its Statement on Developmental and Regulatory Policies dated February 05, 2021, and has since clarified that the intent of the framework is to manage the cybersecurity and other risks arising out of outsourcing arrangements. This framework is broadly aligned with similar instructions previously issued by the RBI to banks and NBFCs.

Please click here to read the full article by Probir Roy Chowdhury & Yajas Setlur, published in Mondaq.