What changed
Earlier, banks could close fraud cases only after CBI/Police/court proceedings were fully disposed. Now, for frauds up to Rs 25 lakh, banks can close them for limited statistical/reporting purposes if investigation or trial has been pending for over three years from FIR filing, provided other conditions like staff accountability, recovery/write-off, insurance settlement, and system review are met.
What it means for you
Banks can now clean up their books of old small fraud cases that were stuck due to slow investigation or court delays, improving their reported fraud statistics and reducing reputational risk. However, banks must still vigorously pursue the underlying cases with agencies and preserve records. For frauds above Rs 25 lakh, the old strict closure norms remain unchanged.
What you must do
- Identify all fraud cases up to Rs 25 lakh where CBI/Police investigation or court trial has been pending for over three years from FIR date.
- Ensure conditions (b) to (e) of the original circular are met: staff accountability, recovery/write-off, insurance settlement, and system review certification by Board/Audit Committee.
- Submit case-wise closure proposals to your Regional Office of RBI and obtain approval before closing.
- Maintain a separate ledger of such closed cases and continue follow-up with investigating agencies and courts.
- Frame or update your internal policy for closure of such fraud cases with Board approval.
Who it affects
All scheduled commercial banks (excluding RRBs), Bank fraud monitoring and reporting teams, Bank legal and compliance departments, Bank boards and audit committees
Can we close a fraud case of Rs 30 lakh under this relaxation?
No. This relaxation applies only to fraud cases involving amounts up to Rs 25 lakh. For amounts above Rs 25 lakh, all original conditions (a) to (e) must be fully complied with, including final disposal by CBI/Police/Court.
After closing the case for statistical purposes, do we still need to pursue the matter with CBI/Police?
Yes. Even after closure for limited statistical/reporting purposes, banks must vigorously follow up with investigating agencies to ensure the investigation reaches its logical conclusion and continue appropriate representation in court proceedings.
What records must we maintain for these closed cases?
Banks must maintain a separate ledger with details of such cases. All relevant records must be preserved until the cases are finally disposed of by CBI/Police or Courts.