New Delhi: The Reserve Bank of India (RBI) has expanded its operational risk management guidelines to cover non-banking financial companies (NBFCs). Previously the sole focus of the 2005 ‘Guidance Note on Management of Operational Risk’ was only applicable to commercial banks.
The updated guidance note requires all regulated entities (REs) in India, including NBFCs and housing finance companies, to establish a strong information and communication technology (ICT) risk management program that aligns with their operational risk management framework.
REs need to manage their reliance on relationships, such as third parties and intragroup entities for critical operations, the RBI said.
The central bank mandated that all REs thoroughly assess risks and perform due diligence before entering into any agreements with parties. The third parties must have the capability to withstand and continue essential operations both when things are running smoothly and when there are interruptions or disturbances.
REs are also required to create plans to respond to and recover from incidents that could disrupt important operations.
