Just Submitted My Inputs to RBI on Fraud Risk Management Draft Directions

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 Published on 02 May, 2026

There are some days where you quietly press “submit”… and then step back.

Today was one such day.

I have shared my inputs (11:41am) with the Reserve Bank of India on the Draft Directions for Commercial Banks – Fraud Risk Management, 2026.

For those who want to explore the draft directly, it is available here:
https://www.rbi.org.in/Scripts/BS_ViewContent.aspx?Id=XXXX

The consultation window remains open until May 08, 2026, and inputs can be shared via:
https://rbi.org.in/Scripts/Connect2Regulate.aspx

So, I will hold back on detailed reflections for now.

But there are a couple of areas in the draft that stood out immediately—areas that, in my view, signal where the system is heading.



🔷 Who Can Contribute to This Consultation

One of the interesting aspects of this consultation is that it is not restricted to banks alone.

Inputs can meaningfully come from a wide range of stakeholders, including:

  • Finance professionals working in banking, NBFCs, fintechs
  • Risk and compliance specialists
  • Practicing lawyers and legal professionals dealing with banking and financial disputes
  • Law enforcement officers handling financial fraud investigations
  • Audit professionals including internal and statutory auditors
  • Technology professionals working on fraud detection, analytics, and cybersecurity
  • Academicians and researchers in banking, finance, and public policy

In many ways, fraud risk management sits at the intersection of finance, technology, and enforcement, and this kind of consultation benefits from that diversity of perspectives.

So, please plan accordingly and share your inputs with Reserve Bank of India.

🔷 Highlight 1

EWS and RFA Framework for Credit Facilities and Loan Accounts
Refer Part B, Page 10, Para 19 to 22

The emphasis on Early Warning Signals and Red Flagging is not new.
But what stands out here is the structured tightening of how signals are handled.

A few elements that caught my attention:

  • Expectation of a comprehensive and well integrated EWS system
  • Defined turnaround time for examining alerts and triggers
  • Formal reporting of Red Flagged Accounts to CRILC within a specified timeline

This is not just about identifying stress or anomalies.
It is about what happens after a signal is generated.

There is a visible shift from passive monitoring to time bound action and accountability.

 

🔷 Highlight 2

EWS Framework for Other Banking and Non Credit Transactions
Refer Part C, Page 10 and 11, Para 23 to 25

This section expands the scope meaningfully.

The framework moves beyond traditional credit monitoring into:

  • Digital transactions
  • Non-credit banking activities
  • Real time transaction behaviour

It also explicitly calls for:

What stands out here is the shift from account centric risk to transaction and behaviour centric risk.

With the growth of real time payments and digital channels, fraud risk is no longer confined to loan accounts.
It is increasingly networked, fast moving, and cross channel.

 

🔷 A Small Pause Before May 08

I will share more detailed reflections after May 08, 2026, once the consultation window closes.

There are a few additional areas in the draft that deserve attention, particularly around reporting frameworks and classification structures, but I will come back to those separately.

 

🔷 Closing Thought

As digital transactions continue to scale,
fraud risk management is also quietly evolving from a process to a system capability.

And trust in digital finance will increasingly depend on how well these invisible systems work in the background.

While this post focuses on directional highlights, the real opportunity lies in how these frameworks get implemented at scale—across systems, processes, and accountability structures. I will share more detailed reflections on this aspect after the consultation window closes.

The Joy of Safe ePayments

Nayakanti Prashant
Citizen Advocate – Digital Transactions Day (April 11, Proposed)

The only Joy is in ‘Digital Transactions Day’.

Author’s Blogs

https://prashantrandomthoughts.blogspot.com
https://prashantnepayments.blogspot.com
https://innovationinbanking.blogspot.com

 

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