RBI issues norms for outsourcing payment, settlement activity by PSOs

Bars PSOs from outsourcing core management functions, including risk management and internal audit; compliance and decision-making functions such as determining compliance with KYC norms

The Reserve Bank of India (RBI) has come out with a framework to put in place minimum standards to manage risks in outsourcing of payment and settlement-related activities by non-bank payment system providers (PSOs), which they have to comply with by March 31, 2022.

The central bank has said the PSOs must have board-approved policies for outsourcing such activities. The board of the PSOs also has to undertake periodic reviews of outsourcing policy, strategies, and arrangements for their continued relevance, safety, and soundness.

In a circular issued on Tuesday, the RBI said, "The PSOs shall not outsource core management functions,