The Reserve Bank of India has issued the Reserve Bank of India (Commercial Banks – Fraud Risk Management) Directions, 2026, effective immediately from July 31, 2026, providing a comprehensive framework for the prevention, early detection, investigation, reporting and monitoring of frauds by Commercial Banks. The Directions strengthen governance by requiring Board-approved Fraud Risk Management Policies, establishment of robust Early Warning Signal (EWS) and Red Flagged Account (RFA) frameworks, and oversight through dedicated Board Committees. They mandate adherence to principles of natural justice before classifying accounts as fraud, prescribe timelines for reporting frauds to RBI, Law Enforcement Agencies (LEAs), and CRILC, and introduce enhanced requirements for staff
accountability, whistleblower mechanisms, data analytics, legal audits, and fraud monitoring. The Directions also provide for penal measures against fraudulent borrowers, reporting through the Central Fraud Registry (CFR), and repeal the earlier fraud risk management instructions, thereby establishing a unified and strengthened fraud risk management framework for Commercial Banks.
