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"The underlying principle of the proposed directions is that the RE should ensure that outsourcing arrangements neither diminish its ability to fulfil its obligations to customers nor impede effective supervision by the supervisory authority," the Reserve Bank of India said after proposing stricter norms for recovery of overdue loans.
The RBI on Thursday proposed stricter norms for recovery of overdue loans under which financial institutions and their recovery agents cannot call borrowers before 8 in the morning and after 7 in the evening. Regulated Entities (REs) like banks and NBFCs should not outsource core management functions, including policy formulation and decision-making functions like determining compliance with KYC norms and according sanction for loans, said the 'Draft Master Direction on Managing Risks and Code of Conduct in Outsourcing of Financial Services'. 'The underlying principle of the proposed direction...
Regulated entities include banks, regional rural banks, payments and small finance banks, NBFCs, housing finance companies, urban, state and central co-operative banks.
The Reserve Bank of India has imposed monetary penalties on Kotak Mahindra Bank and ICICI Bank due to deficiencies in regulatory compliance, according to two separate RBI press releases issued on October 17, 2023.
