What changed
This Master Circular consolidates all fraud-related instructions issued since July 2, 2007, including clarifications provided during the year. It updates the previous circular and is placed on the RBI website as of June 30, 2008.
What it means for you
Banks must streamline their fraud reporting systems to avoid delays, as RBI will enforce penal action under Section 47(A) of the Banking Regulation Act for non-compliance. The circular emphasizes fixing staff accountability for reporting delays and ensuring complete information is submitted promptly.
What you must do
- Ensure fraud cases involving Rs. 1 lakh and above are reported to RBI without delay.
- Submit FMR-1 returns in both soft and hard copy; other returns only in soft copy using the supplied software.
- Fix staff accountability for any delays in fraud reporting to RBI.
- Report frauds involving Rs. 1 crore and above to the special committee of the Board as per paragraph 5.2.4.
Who it affects
All commercial banks (excluding RRBs), Financial institutions
What is the threshold for reporting frauds to RBI?
Frauds involving Rs. 1.00 lakh and above must be reported to RBI. For frauds of Rs. 100.00 lakh and above, additional reporting requirements apply.
What happens if a bank delays reporting a fraud?
RBI may take penal action under Section 47(A) of the Banking Regulation Act, 1949. Banks must also fix staff accountability for such delays.
Which return must be submitted in both soft and hard copy?
Only FMR-1 (Report on Actual or suspected Frauds in Banks) requires both soft and hard copy submission. Other returns are to be submitted in soft copy only.