This article examines the key elements of RBI’s Master Directions on Fraud Risk Management, focusing on RFAs, EWS, staff accountability, and governance requirements. Red Flagged Accounts (RFA) A Red Flagged Account is identified when one or more Early Warning Signals indicate the possibility of fraudulent activity in a loan or credit facility. RBI mandates banks…
(To be verified before disbursement and safe custody) — A. Sanction & Acceptance ☐ Sanction terms communicated to borrower in writing ☐ Written acceptance obtained from borrower ☐ Written acceptance obtained from guarantor (where applicable) ☐ Sanction letter and acceptance kept on record — B. Stamp Duty & Stamping ☐ Document stamped before or at…
This article is to equip bank staff with a practical, compliance-oriented understanding of loan documentation, ensuring creation of legally valid, enforceable, and error-free loan documents. 1. What is Loan Documentation? Loan documentation refers to the systematic process of obtaining, executing, and preserving documents strictly in accordance with sanction terms, applicable laws, and regulatory requirements. Proper…
In view of enhancement in CGTMSE coverage up to Rs.2 crore from the earlier limit of Rs.1 crore, the Indian Banks Association (IBA) has formulated a common MSME loan application for adaption of all member bank of IBA. Scheduled Commercial Banks, Regional Rural Banks, and select Financial Institutions who are member institutions of CGTMSE extend…
Banks frequently receive garnishee orders from civil courts and attachment orders from the Income Tax Department, both of which require immediate and careful action. These orders mandate banks to freeze customer accounts and remit funds to creditors or tax authorities, subject to statutory conditions. Given the legal sensitivity involved, banks must act promptly, accurately, and…
Limited Liability Partnerships (LLPs) represent a hybrid business structure that combines the flexibility of partnerships with the liability protections of companies. Enacted under the Limited Liability Partnership Act, 2008, LLPs have gained prominence among professionals like chartered accountants, lawyers, and SMEs in India for their balanced regulatory framework. Key Features LLPs operate as separate legal…
The Reserve Bank of India (RBI) issued the *Commercial Banks – Credit Risk Management (Amendment) Directions, 2026* on January 5, 2026, which will come into force from April 1, 2026. Commercial banks have also been given the flexibility to adopt these directions earlier, in full. These amendments represent a significant step towards strengthening credit risk…
Applicability and coverage Core prudential eligibility conditions Before declaring any dividend or remitting profits, a bank must satisfy all of the following prudential conditions: Ceiling on payout and CET1‑linked matrix The Directions propose a graded matrix that caps the maximum dividend payout ratio at 75% of PAT, with the actual permissible percentage linked to…
A dirty float (also called a managed float) is an exchange rate regime where a currency is largely market-determined but the central bank intervenes from time to time to influence its value. It sits between a hard peg and a pure float and is widely used by emerging and even advanced economies to balance flexibility…
Background: PML Rules and Name Change The Prevention of Money-laundering (Maintenance of Records) Rules, 2005 define what constitutes an officially valid document (OVD) for KYC purposes. To ease difficulties faced by individuals whose names change after marriage or otherwise, the Government notified the Prevention of Money-laundering (Maintenance of Records) Third Amendment Rules, 2015 (G.S.R. 730(E)…