Master Directions on Frauds – Classification and Reporting by commercial banks and select FIs (Updated as on July 03, 2017)

RBI Master Direction Link

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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Download: Master Directions on Frauds – Classification and Reporting by commercial banks and select FIs (Updated as on July 03, 2017)

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