State Bank revises framework

KARACHI: The State Bank of Pakistan (SBP) on Tuesday revised some sections of the Framework for Risk Management in Outsourcing Arrangements by Financial Institutions in a bid to facilitate banks for outsourcing with third parties and effectively manage the risks.

The SBP said financial institutions were increasingly using third party service providers, including group companies to carry out various activities, functions and processes under the ambit of this framework. Consequently, it has increased risk profile of FIs due to their dependence on third parties and group companies.

“Any outsourcing arrangement outside Pakistan, excluding group outsourcing, shall require SBP’s prior approval,” the SBP said in a circular.

“All such requests shall be signed by the head of compliance and include details of the functions to be outsourced, rationale for the outsourcing, details relating to the proposed service provider, agreement with the service provider, business continuity plan, disaster recovery arrangements and a legal opinion that the arrangement does not violate any relevant local law.”