What changed
RBI issued an updated Master Circular on fraud classification and reporting for Primary Urban Co-operative Banks, replacing the previous version dated July 27, 2006. The circular consolidates all prior instructions on the subject and is now available on the RBI website.
What it means for you
Urban co-operative banks must adhere to stricter timelines for reporting frauds to RBI, with delays inviting penal action under Section 47(A) of the Banking Regulation Act, 1949. Banks need to nominate a senior official responsible for submitting all fraud-related returns and ensure staff accountability for reporting delays.
What you must do
- Nominate a senior official to oversee submission of all fraud returns and reports.
- Streamline internal reporting systems to ensure frauds are reported to RBI without delay.
- Fix staff accountability for delays in reporting fraud cases to RBI.
- Use the prescribed formats (FMR-1 to FMR-4) for reporting frauds, thefts, and robberies.
- Strictly adhere to the timeframe specified in the circular to avoid penal action.
Who it affects
Chief Executives of all Primary (Urban) Co-operative Banks, Senior officials nominated for fraud reporting, Staff involved in fraud detection and reporting
What are the fraud classification categories under this circular?
Frauds are classified based on the Indian Penal Code into categories such as misappropriation, fraudulent encashment, unauthorised credit facilities, negligence, cheating, foreign exchange irregularities, and any other type not covered under specific heads.
What happens if a bank delays reporting a fraud to RBI?
Delays in reporting frauds can lead to penal action under Section 47(A) of the Banking Regulation Act, 1949, as applicable to co-operative societies. Banks must also fix staff accountability for such delays.
Which reporting formats are prescribed for frauds?
The circular specifies formats FMR-1 (Report on Actual or Suspected Frauds), FMR-2 (Quarterly Report on Frauds Outstanding), FMR-3 (Quarterly Progress Report on Frauds), and FMR-4 (Report on Dacoities/Robberies/Thefts/Burglaries).