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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

RBI issues Reserve Bank of India (Small Finance Banks – Fraud Risk Management) Directions, 2026

31-Jul-2026 | RBI/DoS/2026-27/421 DoS.CO.FMG.15/23.04.001/2026-27

RBI has issued Reserve Bank of India (Small Finance Banks – Fraud Risk Management) Directions, 2026 with effect from 31st July, 2026 Key highlights are as follows: 1. These Directions are issued with a view to providing a framework for prevention, early detection, and timely reporting of incidents of fraud by Small Finance Banks to Law Enforcement Agencies (LEAs) and Reserve Bank of India (‘RBI’) and dissemination of information by RBI and matters connected therewith or incidental thereto 2. The SFB shall put in place a Board approved policy on Fraud Risk Management delineating roles and responsibilities of Board / Board Committees and Senior Management of the SFB 3. In case of a credit facility / loan account classified as red-flagged account, the SFB shall use an external audit, or an internal audit as per its Board approved Policy, for further investigation in such accounts 4. The SFB shall establish suitable nodal point(s) / designate officer(s) for reporting incidents of fraud to LEAs and for proper coordination to meet the requirements of the LEAs 5. To ensure uniformity and avoid duplication, reporting of frauds involving forged instruments, including fake / forged instruments sent in clearing in respect of truncated instruments, shall continue to be done by the paying banker and not by the presenting banker For more information, please refer the attached pdf

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