RBI has proposed a new data governance framework for banks and NBFCs. Its purpose is to strengthen data risk management. This draft includes many important rules like board-level monitoring and ensuring data quality.
New Delhi, [भारत] July 16 (ANI): The Reserve Bank of India (RBI) has proposed a comprehensive data governance framework that will require banks, non-banking financial companies (NBFCs) and other regulated entities to strengthen data risk management as part of their overall risk management systems.
“Data has increasingly emerged as a critical organizational asset for regulated entities (REs), underpinning business operations, customer service, financial reporting, regulatory compliance, risk management and strategic decision making,” it said. According to the draft guidelines of RBI, the proposed framework sets out the regulatory expectations on data governance, including governance structure, roles and responsibilities, data architecture, metadata and lineage, data quality, and third-party data-sharing arrangements. The central bank has invited comments from the public on this draft till August 17.
To whom will this framework apply?
This draft framework will be applicable to commercial banks, small finance banks, payments banks, co-operative banks, regional rural banks, NBFCs, All India Financial Institutions, Asset Reconstruction Companies (ARCs) and credit information companies.
Why was this framework needed?
RBI said that with the increasing volume, variety and velocity of data, strong governance has become important to ensure that data remains accurate, consistent, secure and fit for purpose across business functions and systems. The central bank noted that weaknesses in data governance and its management could expose regulated entities to financial, operational, compliance and reputational risks.
Under the proposal, regulated entities will have to establish a data governance framework covering the entire data lifecycle. “A RE should establish a data governance framework (DGF) applicable to all data and align it with its risk management framework,” the RBI draft proposal said.
Monitoring will be done at board level
RBI has also proposed that the Board monitor this framework, with each regulated entity either constituting a dedicated board-level data governance committee or delegating this responsibility to an existing board committee.
“An RE should set up a board-level data governance committee (DGC) or assign the responsibility to an existing board committee,” the RBI draft proposal said. This designated committee will be responsible for approving data governance policies, overseeing implementation, reviewing significant breaches, and reporting key issues to the board.
Proposal for ‘Single Source of Truth’
RBI has further proposed that every regulated entity maintain a “single source of truth” for every data element to ensure that downstream systems, models and business processes rely on a single authoritative source. (ANI)
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