The Reserve Bank of India (RBI) has issued three revised master directions on fraud risk management for REs (Regulated Entities).
Key master directions on fraud risk management for REs:
- REs must comply with the principles of natural justice within a specified timeframe before classifying Persons/Entities as fraud, following the Supreme Court judgment in State Bank of India & Ors. Vs. Rajesh Agarwal & Ors, March 2023.
- Establishment of a Data Analytics and Market Intelligence Unit to strengthen risk management systems.
- The framework on Early Warning Signals and Red Flagging of Accounts has been enhanced for the early detection and prevention of fraud.
- REs are required to report timely to law enforcement agencies and supervisors.
- Emphasizes the role of the Board in governance and oversight of fraud risk management.
- Strong focus on instituting robust internal audit and control frameworks within REs.
Ref: Source
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Frequently Asked Questions (FAQs)
What are Regulated Entities (REs)?
Regulated Entities (REs) refer to specific types of financial institutions that are subject to regulatory oversight by a financial regulatory authority. In the context of India, REs are overseen by the Reserve Bank of India (RBI).