FRAUD RISK Management in Credit
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Certified Credit Professional — Certified Credit Professional.
One-liners from this chapter
Free sample — 8 of 78 rapid-fire Q&A cards.
What is the primary objective of Fraud Risk Management in Credit per RBI Master Direction?
Detect, classify, report and pursue fraudulent borrowers, wilful defaulters, non-cooperative borrowers and fugitive economic offenders.
Define Early Warning Signals (EWS) in credit monitoring.
Indicators suggesting borrower financial stress, fund diversion or default risk; enable proactive action before NPA classification.
What is RBI's supervisory philosophy shift regarding fraud detection?
From post-mortem (reactive) to post-partum (proactive); identify and act on EWS immediately upon appearance.
What is a Red Flagged Account (RFA)?
Account classified as suspicious when one or more EWS appear with unusual operational behaviour; intermediate stage triggering investigation.
In consortium banking, what is each lender's responsibility regarding EWS?
Conduct independent due diligence; never rely solely on lead bank; share EWS observations promptly across consortium.
What is the primary objective of a Forensic Audit in fraud cases?
Track fund diversion, prove wilful default/fraud, verify asset usage, document court-admissible evidence.
Who maintains the empanelment list of Forensic Auditors in India?
Indian Banks' Association (IBA); banks must select auditors only from approved panel.
Define Wilful Default under RBI guidelines.
Borrower deliberately fails to honour repayment despite means, or misuses funds, or disposes secured assets without lender consent.
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