RBI revises norms, asks banks to hear borrowers before taking any action

The RBI on Monday revised its master directions on fraud risk management to incorporate the recommendations of a Supreme Court judgement which asks banks to hear a borrower before an account is classified as fraud.

The central bank said the three revised master directions on fraud risk management are principle-based and strengthen the role of the board in overall governance and oversight of fraud risk management.

“The master directions now expressly require that the REs (regulated entities) shall ensure compliance with the principles of natural justice in a time-bound manner before classifying persons/entities as fraud, duly taking into account the SC Judgment dated March 27, 2023,” a RBI statement said.