Non Banking Financial Companies(NBFCs)

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Frauds – Future approach towards monitoring of frauds in NBFCs

DNBS.PD.CC. No 127 /03.10.42/2008-09

August 14, 2008

All deposit taking NBFCs (including RNBCs)

Dear Sirs,

Frauds – Future approach towards monitoring of frauds in NBFCs

Please refer to Company Circular No. 121 dated July 1, 2008 on the captioned subject which has now been revised as under:
1) Paragraph No. 3.1.3 of Master Circular DNBS.PD.CC.No.121 /03.10.42/2008-09 dated July 01, 2008 has been revised as under-

'NBFCs may also report frauds perpetrated in their subsidiaries and affiliates/joint ventures. Such frauds should, however, not be included in the report on outstanding frauds and the quarterly progress reports referred to in paragraph 4 below'.

2) Paragraph No.3.2.2 of Master Circular DNBS.PD.CC.No.121 /03.10.42/2008-09 has been revised as under-
'In respect of frauds in borrowal accounts, additional information as prescribed under Part B of FMR-1 should also be furnished'.

2.  These instructions are being issued in exercise of powers vested in the Bank under Section 45K and 45L of the RBI Act, 1934.

3.  A copy of the updated guidelines is enclosed for meticulous compliance.

Yours faithfully

(P. Krishnamurthy)
Chief General Manager In-Charge