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Reserve Bank of India Issues Revised Master Directions On Fraud Risk Management For Cooperative Banks
Rajesh Kumar
17 July 2024 3:19 PM IST
The Reserve Bank of India (RBI) has issued revised Master Directions on Fraud Risk Management for Urban Cooperative Banks (UCBs), State Cooperative Banks (StCBs), and Central Cooperative Banks (CCBs). The revised Directions, titled "Reserve Bank of India (Fraud Risk Management in UCBs / StCBs / CCBs) Directions, 2024," replace the earlier guidelines. They require Cooperative...
The Reserve Bank of India (RBI) has issued revised Master Directions on Fraud Risk Management for Urban Cooperative Banks (UCBs), State Cooperative Banks (StCBs), and Central Cooperative Banks (CCBs).
The revised Directions, titled "Reserve Bank of India (Fraud Risk Management in UCBs / StCBs / CCBs) Directions, 2024," replace the earlier guidelines. They require Cooperative Banks to establish robust policies and mechanisms to manage fraud risks effectively.
Key highlights:
- Governance Structure: Mandates for a Board-approved policy on fraud risk management and the establishment of a Special Committee of the Board for Monitoring and Follow-up of fraud cases.
- Early Warning Systems: Implementation of frameworks for early detection of fraud through indicators integrated with banking systems.
- Reporting Requirements: Obligations to report fraud incidents promptly to law enforcement agencies and the RBI.
- Legal Audits and Compliance: Requirement for periodic legal audits of large-value loan accounts and adherence to stringent reporting timelines under the Fraud Monitoring Returns (FMR) framework.
