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Banks must now designate a specific person or team (nodal point) to report fraud to law enforcement agencies (LEAs) and coordinate with them to meet their needs. If fraud is found, it also needs to be reported to the RBI quickly.
How will reporting work? To ensure consistency, banks will use a specific online portal to report fraud to the RBI.
10 specific categories of transactions that will be flagged as fraud and reported to the RBI. These include:
Misusing funds or committing a breach of trust (e.g., embezzlement)
Cashing fake cheques forexor using forged instruments
Manipulating accounts (e.g., creating fake accounts or hiding information to steal money)
Cheating through deception or impersonation
Forgery (creating fake documents)
Tampering with records to commit fraud
Granting loans for illegal purposes
Cash shortages due to fraudulent activity
Fraudulent foreign exchange transactions
Online banking or digital payment fraud
Reporting incidents of fraud to RBI:
Banks need to report all fraud cases (regardless of amount) to the RBI using an online portal (FMR) within 14 days of classifying an incident as fraud.
Frauds committed on overseas branches of Indian banks must also be reported to the local authorities in that country.
If a bank's subsidiaries or group entities (not regulated by financial authorities) are involved in fraud, the bank must report it to the RBI separately. These entities, however, need to follow fair procedures before declaring someone a fraudster.
Banks are responsible for ensuring timely reporting and investigating staff accountability for delays in identifying or reporting fraud.
The FMR report should only include individuals or entities genuinely involved in the fraud.
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