Master Directions on Frauds
The Reserve Bank of India (RBI) has issued master directions for commercial banks and select financial institutions (FIs) on the classification and reporting of frauds.
Applicability: These directions are applicable to all commercial banks and select FIs, including urban co-operative banks and state co-operative banks.
Purpose: The purpose of these directions is to provide a framework for the classification, reporting, and monitoring of frauds.
Classification of Frauds: Frauds are classified into three categories based on the amount involved:
– Category A: Above ₹1 crore
– Category B: ₹1 lakh to ₹1 crore
– Category C: Below ₹1 lakh
Reporting of Frauds: Frauds must be reported to the RBI, and delays in reporting will be viewed seriously.
Internal Reporting: Banks/FIs must report frauds to their Board, and conduct quarterly and annual reviews of frauds.
Reporting to Police/CBI: Banks/FIs must report frauds to the police/CBI, and the agency to whom the complaint should be lodged depends on the category of bank and the amount involved in the fraud.
Closure of Fraud Cases: Banks/FIs must ensure that fraud cases are closed only after obtaining clearance from the RBI.
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