Reserve Bank of India has made changes to the master circular on risk management. The central bank released a list of 10 types of transactions that banks will select while declaring fraud.
RBI New Guidelines: The Reserve Bank of India has changed the rules of risk management of banks. RBI issued a circular on Tuesday saying that revised rules have been issued on master instructions on fraud risk management in commercial banks including regional rural banks and all India financial institutions.
RBI issued circular
RBI said in its circular, “These master instructions have been prepared on the basis of a comprehensive review of earlier master instructions, circulars and emerging issues. These master instructions are principle-based and strengthen the role of the board in the overall governance and monitoring of fraud risk management in regulated entities (RE).”
Let us tell you that the central bank has issued three changed master rules on fraud risk management.
Commercial banks (including regional rural banks) and All India Financial Institutions;
Cooperative banks (urban cooperative banks/state cooperative banks/central cooperative banks);
Non-banking finance companies (including housing finance companies).
36 old circulars removed
The directions issued by the Reserve Bank of India are aimed at improving better fraud risk management infrastructure and systems in regional rural banks, housing finance companies and rural cooperative banks. According to the regulator, after the adjustment, RBI removed 36 previous circulars on the subject in an effort to simplify the rules and reduce the compliance burden.
See list of fraud transactions
To maintain uniformity and consistency, when banks report fraud incidents to RBI through the web portal by filing fraud monitoring returns (FMRs), they will have to select the most relevant category from the list given below.
(i) Misappropriation of funds and criminal breach of trust.
(ii) Fraud by means of a forged device and the taking of money by means of which the person is a fraud.
(iii) Manipulation of bank passbook or transaction through false account.
(iv) Fraud by concealing true information with intent to defraud any person.
(v) Forgery by making any false document/electronic record with intent to cheat.
(vi) Intentional falsification, destruction, alteration, mutilation of any passbook, electronic record, paper, writing, valuable security or account with intent to defraud;
(vii) Fraudulent loan facility.
(viii) Cash shortage due to fraud;
(ix) fraudulent transactions involving foreign currencies;
(x) fraudulent electronic banking/digital payment transactions.
