Bangladesh Bank on Monday asked scheduled banks not to outsource its core and risk management-related functions and core banking operations from outsourcing service providing organisations. The BB issued a circular and guidelines to managing directors and chief executive officers of all banks on outsourcing arrangements asking them to conduct their outsourcing activities by dealing a written agreement with the service providing agencies.
The BB, however, said foreign banks, parts of its core management functions or risk management functions could be operated by any of its offices from outside the country.
The central bank asked the banks to develop a comprehensive outsourcing policy approved by their respective board of directors in line with the central bank regulation.
The BB also prepared a list of allowed outsourcing arrangements which are storing or warehousing physical records and documents, electronic or virtual data printing of cheques, drafts, pay-orders, and other similar banking instruments.
The banks will be allowed to verify the address and document of their clients, to operate call centre, mail receiving and dispatch, marketing credit or debit cards, consumer or SME loans up to the stage before credit request preparation.
The banks will be able to verify the credit-related security, charge creation or registration, stock verification and valuation through the outsourcing service providing organisations.
By taking help from the outsourcing service providing organisations, the banks will complete their recruitment process before face-to-face interviews, background checking and document verification of candidates and employees.
The banks will be able to conduct the CSR activities, and payroll processing and employee benefit programmes through the service providing organisations.
The banks will be able to conduct survey on customer, industry and market-related situation, and to cash in ATM booths, utility bill collection booths by taking cooperation from third parties.
The banks will be allowed to maintain their purchased software, hardware and other machines and equipment through the third parties.
Any outsourcing service providing agencies outside Bangladesh will require prior approval of the BB under Section 12 of the Bank Company Act, 1991 regardless of the fact that the specified functions is conducted by or data is provided to an unrelated third party or any office of the banking company, its holding or subsidiary company or any of its affiliates.
The banks will not be allowed to outsource the activities which would hamper the central bank’s inspection and supervision on them.
The banks will have to ensure that all information prohibited from sharing by laws or regulations are not disclosed to service providers and take appropriate steps to require that service providers protect confidential information of both the bank and its clients from intentional or inadvertent disclosure to unauthorised persons.
A bank should also consider whether it is appropriate to notify customers that customer data may be transmitted to a service provider, taking into account any statutory provisions that may be applicable.
The outsourcing arrangements should not affect the rights of a customer against the bank, including the ability of the customer to obtain redress as applicable under relevant laws, the BB circular said.
The banks will have to establish a well defined mechanism to redress the complaints of their customers regarding outsourced services and ensure that genuine grievances are addressed promptly.
-With New Age input
