RBI Guidelines For NBFC
RBI Guidelines for NBFC enhance the safety, security and operational efficiencies of all NBFCs the RBI has issued directions on the ‘Information Technology Framework for the NBFC sector’ on June 08, 2017.
- While evolving technology ecosystem and enhanced dependence on technology, analyzing the risks associated with legacy systems and inefficient IT management the Central bank is pushing for better planning and management of Information and data of NBFCs.
- Taking a holistic view of IT and its importance the guidelines include suggestions on Business Continuity Planning, robust IT Framework, Policy formulation, and audit.
- The directions apply to non – deposit taking NBFCs – NBFC SI and NBFC Non-SI. The RBI has very strategically called for all NBFC to form a committee with Senior Management to lead and take a holistic view of the current IT infrastructure, Design and Deploy a sound IT policy that considers requirements, risks and rewards for the company.
- Today Non-Banking finance companies are driving the growth of the country by serving the underserved and unbanked with their extensive network and sound customer engagements. Their growth and profitability need to be linked with the acceptance and implementation of a good software to manage their customers and loans.
- With the evolution of technology from Server to Cloud, desktop to Mobile and DOS to Android a large gap has been created.
- Many businesses are still dependent on redundant and obsolete hardware's and software like Loan Management & Loan origination systems that fail to capture and process information that is relevant today.
- Importance of Data and its interpretation of business insights is unchallenged, companies that use data to its advantage are more successful and profitable than those who depend on incompetent systems.
- NBFCs possesses very critical and confidential data whose security can be compromised.
- The guidelines stress that ‘Information is an asset to all NBFCs and Information Security (IS) refers to the protection of these assets in order to achieve organizational goals’ and very rightly it has advised the NBFCs to frame an IT & IS Policy that considers Confidentiality, Integrity, Availability & Authenticity.
- NBFC should consider developing a system that is safe, secure and smart, a system that not just controls risks but is cognitively advanced to avert risks.
- Providing access to information to users based on need, creating responsibility of actions by Business Process Management enabled applications, ensuring physical and virtual security of data and maintaining proper audit trails will help them in maintaining data Authenticity & confidentiality.
- Cybersecurity and Cyber crisis management is the most pertinent topic that needs to be addressed while considering IT & IS.
- With the world over the internet, it is a staple that cannot be avoided.
- Mobile technology and the sharing of information on multiple systems and locations that enable businesses to harness the power of technology need to be secure.
- Data needs to be transferred and stored with utmost powerful DB management tools, securing data with multiple firewalls and hosting the data at secured Data Centers like AWS, MS Azure or other cloud data centers should be evaluated for their merit.
- NBFC big or small should invest in a good IT partner that can advise and help them establish a controlled and dynamic environment for growth.
- With the evolution of cloud technology and secured Data Centers where multiple Data backups and instances can be stored are very useful in creating a sound Business Continuity Plan.
- Disaster recovery experts are betting on the cloud that promises a very aggressive response time in case of any incident.
- Technology and its optimum use will be the most important growth drivers for any business and in such businesses where data is the only asset you have, and this makes technology the most profit center to invest it.
- With a robust application, Management can monitor day to day activities, map data derivations to policies and invest time in growth.
- The RBI with these guidelines has created a 2 point agenda for the NBFC one that stresses on Importance of IT & IS and other impresses upon them the importance of the use of IT.
- With the highest authority making an open call for IT readiness all NBFCs should conduct a comprehensive analysis of their current software and be ready for the future.
