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Print articleOutsourcing Limitations for Indonesia Banks
March, 2012 -
Bank Indonesia has issued Regulation No. 13/25/PBI/2011 regarding The Precautionary Principle to Delegate Some Commercial Bank Work to Third Parties (“Regulation”). Under the Regulation, banks should be more selective in selecting outsourcing companies in order to maintain the level of service provided to customers.
In outsourcing work, commercial banks must comply with prudential principles and risk management requirements and ensure that all legal and contractual obligations are complied with. Banks will be liable for work done by third parties.
Only work classified as a support activity may be outsourced, while main activities must be undertaken by the bank’s own employees. Tasks classified as main activities are those of, among others, tellers, customer service personnel, credit analysts, account officers and customer relations personnel. Tasks classified as support activities are, among others, those of call centers, telemarketing, direct sales/sales representatives, debt collectors, secretaries, receptionists, etc.
Support activities are categorized as low-risk, not requiring a high level of competence in the banking industry, and not related to any decision making regarding the bank’s operations. Banks may not transfer their responsibility for or risk in relation to the outsourced work to the outsourcing company.
There are requirements for outsourcing companies to satisfy and for outsourcing agreements to cover.
Banks need to submit annual reports on their outsourcing to Bank Indonesia.
In outsourcing work, commercial banks must comply with prudential principles and risk management requirements and ensure that all legal and contractual obligations are complied with. Banks will be liable for work done by third parties.
Only work classified as a support activity may be outsourced, while main activities must be undertaken by the bank’s own employees. Tasks classified as main activities are those of, among others, tellers, customer service personnel, credit analysts, account officers and customer relations personnel. Tasks classified as support activities are, among others, those of call centers, telemarketing, direct sales/sales representatives, debt collectors, secretaries, receptionists, etc.
Support activities are categorized as low-risk, not requiring a high level of competence in the banking industry, and not related to any decision making regarding the bank’s operations. Banks may not transfer their responsibility for or risk in relation to the outsourced work to the outsourcing company.
There are requirements for outsourcing companies to satisfy and for outsourcing agreements to cover.
Banks need to submit annual reports on their outsourcing to Bank Indonesia.
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