What changed
Previously, banks had to furnish hard copies of FMR-1 reports for all frauds detected at their subsidiaries, affiliates, or joint ventures. Now, if the subsidiary is regulated by RBI and independently required to report frauds to RBI, the parent bank is exempt from submitting the hard copy FMR-1 for those cases.
What it means for you
This reduces duplicate reporting burden for parent banks when their subsidiaries are already under RBI's direct fraud reporting framework. Banks can streamline compliance by relying on the subsidiary's own reporting, but must ensure the subsidiary indeed meets the independent reporting requirement. It does not change the parent's overall fraud monitoring responsibilities.
What you must do
- Identify which of your subsidiaries/affiliates/joint ventures are regulated by RBI and independently required to report frauds to RBI.
- Stop submitting hard copy FMR-1 reports for fraud cases at those entities, but maintain internal records.
- Verify that the subsidiary's fraud reporting to RBI is compliant with its own guidelines.
- Update your internal fraud reporting SOPs to reflect this exemption.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), All India Financial Institutions, Parent banks with subsidiaries/affiliates/joint ventures regulated by RBI
Does this exemption apply to all subsidiaries of a bank?
No, only to those subsidiaries that are regulated by RBI and independently required to report fraud cases to RBI under their own guidelines.
Do we still need to report frauds at unregulated subsidiaries?
Yes, for subsidiaries not regulated by RBI or not independently required to report frauds, the parent bank must continue to furnish hard copy FMR-1 reports as per the original master circular.