IT Framework For NBFCS
The IT framework for Non-Banking Financial Companies (NBFCs) encompasses guidelines and standards for the implementation and management of information technology systems. It includes protocols for data security, risk management, compliance with regulatory requirements, and the adoption of emerging technologies to support the operations and growth of NBFCs while ensuring the integrity and confidentiality of financial data.
Applicability: The directives are divided into two categories:
- Directions applicable to all NBFCs with an asset size above Rs 500 crore.
- Directions for NBFCs with an asset size below Rs 500 crore.
As the Non-Banking Financial Company (NBFC) industry matures and expands, ensuring a robust Information Technology/Information Security (IT/IS) framework, Business Continuity Planning (BCP), Disaster Recovery (DR) Management, and IT audit practices is paramount. To elevate safety, security, and operational efficiency for both NBFCs and their customers, the Reserve Bank of India (RBI) has introduced the Information Technology Framework for the NBFC Sector.
Applicability: The directives are divided into two categories:
- Directions applicable to all NBFCs with an asset size above Rs 500 crore.
- Directions for NBFCs with an asset size below Rs 500 crore.
For Systemically Important NBFCs (NBFC-SI): In their upcoming board meetings, the following agenda items should be addressed:
- Conduct a gap analysis between the existing IT framework and the guidelines specified in the Directions.
- Formation of Committees:
- IT Strategy Committees
- IT Steering Committees
- Policies to be Formulated and Implemented by the Board:
- Information Technology Policy
- Information Security Policy
- Cyber Security Policy
- Change Management Policy
- Policy for Information System Audit (IS Audit)
- Business Continuity Planning Policy
- Reporting requirement with RBI to be complied with
- Conduct of IS Audit to form an integral part of the Internal Audit system
Systemically Important NBFCs (Asset size below Rs 500 crore
The proposed IT framework focuses on IT Governance, IT Policy, Information & Cyber Security, IT Operations, IS Audit, Business Continuity Planning, and IT Services Outsourcing. The board should initiate the gap analysis process before the end of the third quarter.
NBFCs with asset size below Rs500 crore
RBI recommends specific actions for smaller NBFCs to develop basic IT systems, primarily for database maintenance:
Establish a Board-approved Information Technology policy/Information system policy.
Scale up IT systems progressively with the growth and complexity of NBFC operations.
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