The Bangko Sentral ng Pilipinas announced a new set of guidelines for all banks and non-banking financial institutions in the country.
The new rules seek to ensure that a proper risk evaluation is carried out before entering into an outsourcing contract with a third party. It outlines that strategic, operational, legal, and compliance risk areas be identified first.
Banks and non-banking financial institutions are to come up with policies that help them select the best service providers that meet these risk evaluation criteria strictly. Only after that are they allowed to proceed to price and volume negotiations.
They must also have risk mitigation measures in place. In addition, risk is to be continuously monitored during the process.
Deputy Governor Nestor Espenilla Jr. said that these new guidelines would help ensure better governance at banks and non-banking financial institutions. The amendments to the existing rules were made by the Monetary Board.
The Bangko Sentral ng Pilipinas permits only some banking processes to be outsourced. From a risk perspective, the bank / non-banking financial institution must first see if it is better to do it in-house or outsource it.