Banks must hear out loan defaulters before declaring accounts 'fraud': RBI
5 months, 1 week ago

Banks must hear out loan defaulters before declaring accounts 'fraud': RBI

Hindustan Times  

India's central bank on Monday asked lenders to give defaulting borrowers enough time to respond before they are classified as "fraud accounts," following a judgment by the country's top court. Banks will now have to issue a show-cause notice to fraudulent entities with complete details of the fraud, the Reserve Bank of India said. Banks will now have to issue a show-cause notice to fraudulent entities, with complete details of the fraud, the Reserve Bank of India said in a release. Under the revised directions, banks are also required to have a framework for Early Warning Signals and the so-called Red Flagging of Accounts - where suspicion of fraudulent activity is thrown up by the presence of one or more indicators - under the overall risk management policy.

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History of this topic

Bank fraud allegations must never be levelled lightly
5 months, 1 week ago

Bank fraud allegations must never be levelled lightly

Live Mint  

The Reserve Bank of India’s latest revision of its Master Circular on Fraud Risk Management in banks and other regulated entities has not come a day too soon. This revision of instructions follows a recent Supreme Court ruling which said the principles of natural justice demand that the borrower be given a chance and time to respond to a charge …

RBI asks lenders to hear out loan defaulters before tagging accounts as ‘fraud’; check revised norms
5 months, 1 week ago

RBI asks lenders to hear out loan defaulters before tagging accounts as ‘fraud’; check revised norms

Live Mint  

The Reserve Bank of India on Monday, July 15, asked banks and other financial institutions to give defaulting borrowers adequate time before they are classified as “fraud accounts". The banks now have to issue show-cause notices to fraudulent account holders which will have the full details of the fraud, said the RBI in a release. The change in the current …

RBI alarmed at lakhs of bank accounts being used for fraud: Report
5 months, 2 weeks ago

RBI alarmed at lakhs of bank accounts being used for fraud: Report

Live Mint  

The Reserve Bank of India expressed its surprise at some banks having lakhs of accounts that are used for fraudulent transactions and evergreening loans, reported Business Standard. We found certain banks having lakhs of such accounts with apparently no valid reason,” RBI Deputy Governor Swaminathan J said on Tuesday in his address to banks, with chief financial officers and auditors …

Lender Banks Required To Provide Audit Reports To Borrowers & Allow Representation Before Classifying Accounts As Fraud: Gujarat High Court
9 months, 3 weeks ago

Lender Banks Required To Provide Audit Reports To Borrowers & Allow Representation Before Classifying Accounts As Fraud: Gujarat High Court

Live Law  

The Gujarat High Court while partly allowing a special civil application has emphasized the importance of lender banks affording borrowers the opportunity to review audit reports and present their case before categorizing an account as fraudulent. During meetings held on 18.08.2020 and 29.09.2020, discussions were held regarding forensic audit reports dated 11.08.2020 and 18.09.2020, along with various related issues, including …

‘Banks need to finetune systems to curb fraud’
11 months ago

‘Banks need to finetune systems to curb fraud’

The Hindu  

Though the Indian banking sector has undergone phase-wise reforms over the past few decades, the banks have to finetune their systems to curb the incidence of frauds in the sector, W.K. He was delivering the inaugural address at the two-day national conference on ‘Financial Sector Reforms in India’ organised by Gulbarga University here on Friday. Prof. Sarwade claimed that the …

Bank Fraud: Lenders to Approach RBI to Seek Change in Definition; Here's Why
2 years, 7 months ago

Bank Fraud: Lenders to Approach RBI to Seek Change in Definition; Here's Why

News 18  

As part of efforts to move away from the requirement of all banks to label a borrowing company and all its accounts as ‘fraud’ when one lender puts such a fraud tag, banks are planning to approach the Reserve Bank of India to seek a change in the definition of ‘fraud’, according to an ET report. The current rule of …

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