The Reserve Bank of India (RBI) on July 31, 2026, issued the Reserve Bank of India (Payments Banks – Fraud Risk Management) Directions, 2026.
These Directions shall come into effect on July 31, 2026.
The following has been stated:
• The Directions establish a comprehensive framework for the prevention, early detection, investigation, reporting, and monitoring of frauds in Payments Banks. The Directions require every bank to adopt a Board-approved Fraud Risk Management Policy covering fraud prevention, investigation, recovery, staff accountability, reporting, and an Early Warning Signals (EWS) and Red Flagged Accounts (RFA) framework.
• They also provide for a Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds (SCBMF), periodic review of fraud trends, whistle-blower mechanisms, and a dedicated fraud risk management structure headed by a senior official.
• The Directions further prescribe a framework for identifying suspicious transactions through EWS, monitoring digital banking transactions, strengthening data analytics, and taking timely remedial action to prevent fraud. They lay down procedures for reporting frauds to Law Enforcement Agencies (LEAs) and the Reserve Bank of India through the Fraud Monitoring Return (FMR), maintaining and using the Central Fraud Registry (CFR), examining staff accountability, imposing regulatory restrictions on persons and entities classified as fraud, reporting cheque-related frauds, and maintaining records for fraud closure.
• The Directions also define the role of auditors, prescribe reporting requirements for cases of theft, burglary, dacoity, and robbery, repeal the earlier fraud risk management framework applicable to Payments Banks, and preserve actions taken under the previous directions.
[Notification no. – RBI/DoS/2026-27/430 DoS.CO.FMG.24/23.04.001/2026-27]
