The Reserve Bank of India has decided to bring offshore outsourcing of financial services by foreign offices of Indian banks under its ambit as a part of its policy on cross-border supervision.
In a circular issued this evening, RBI has asked banks to ensure that offshore service providers are a regulated entities.
The banking regulator has also asked banks to ensure that the offshore regulatory authority should have access to data of Indian operations even if the financial services are outsourced or processed in the home country.
The jurisdiction of courts in the offshore location, where the data is maintained, does not extend to the operations of banks in India merely on the basis of the fact that the data are being processed there even though the actual transactions are undertaken in India, RBI said. The regulator decided to step up cross-border supervision this year.