Fraud tag on loans only after hearing borrowers: RBI to banks

The RBI has mandated banks to give borrowers three weeks to respond before labeling accounts as fraudulent, aligning with a Supreme Court ruling on natural justice. Banks must issue detailed notices and consider responses before final classification, ensuring transparency. Boards must review fraud risk policies every three years, with a committee overseeing cases chaired by an independent director. Auditors are to investigate flagged accounts promptly, aiding in fraud detection. These measures aim...