How NBFCs and Banks Can Strengthen Fraud Risk Management in Line with RBI's Master Directions (2024)

The Reserve Bank of India’s Master Directions on Fraud Risk Management (2024) are a wake-up call for the Indian financial sector. These comprehensive guidelines mandate financial institutions to enhance their fraud risk frameworks, ensure quicker detection and reporting, and embed accountability at every level. NBFCs and banks must go beyond reactive controls to adopt an end-to-end, technology-driven fraud management approach.

The Regulatory Push: RBI’s new directives emphasize the following:

• Timely detection, classification, and reporting of frauds.

• Adherence to reporting formats (FMR-1, FMR-2, and FMR-3).

• Board-level oversight of fraud cases.

• Integration of fraud monitoring with internal audit and risk functions.

Challenges Faced by Institutions: Despite good intent, many banks and NBFCs continue to rely on fragmented systems:

• Investigations tracked on Excel or emails.

• No centralized case repository.

• Delayed reporting due to manual processes.

• Audit findings not linked to fraud risk management.

How FraudSentinel360 Bridges the Gap: FraudSentinel360 offers a unified platform that aligns fully with the RBI Master Directions. Key features include:

• Centralized Fraud Lifecycle Management: From initial red flag to investigation, committee review, and closure—all steps are systemized.

• Automated FMR Reporting: Preloaded RBI formats allow real-time report generation with case data.

• Role-Based Access Control: Prevents data leakage and ensures authorized workflows.

• Internal Audit & RCA Linkage: Internal audit findings can be linked to specific frauds for risk learning.

• Dashboard and Alerts: Track high-risk units, SLA breaches, pending approvals, and recurring red flags.

Implementing FraudSentinel360 ensures not just compliance with RBI but also enhances organizational resilience, efficiency, and transparency.