RBI/2004-05/146 Ref.DBS.ARS.No. B.C. 4 /08.91.001/2004-05
August 27, 2004
All Scheduled Commercial Banks (excluding RRBs)
Dear Sir,
Terms and conditions of appointment of Statutory/
Concurrent/ Internal Auditors - Implementation of the recommendations of the
Committee on Legal Aspects of Bank Frauds and the recommendations of the High
Level Group set up by the Central Vigilance Commission (CVC)
Please refer to our circular letter DBS. ARS.
No. 599/08.91.001/2002-2003 dated January 21, 2003 advising you to communicate
to the Statutory, Internal and Concurrent Auditors appointed by the bank, "to
specifically report, simultaneously, to the Chief Executive Officer of the bank
and Central Office of the Department of Banking Supervision, RBI, Mumbai, any
matter susceptible to be fraud or fraudulent activity or any foul play in any
transactions."
2. These instructions were partially modified
in terms of circular DBS.FGV(F) No. BC.15/23.08.001/2002-2003 dated May 14,
2003 to the effect that only instances of fraud or fraudulent activity where
the amount involved is Rs. 100 lakhs or above should be reported to the Reserve
Bank of India, Department of Banking Supervision, Central Office, Mumbai and
all other instances should be reported to Regional office of the Reserve Bank
of India, Department of Banking Supervision under whose jurisdiction the Head
Office of the bank falls.
3. Despite having issued modified instructions
and having incorporated the same while conveying the names of statutory central
auditors/statutory branch auditors or approving their names as required in terms
of section 30(1A) of the Banking Regulation Act, 1949 (in respect of private/foreign
banks), banks continue to forward reports on frauds/fraudulent transactions
below Rs. 100 lakhs to Reserve Bank of India, Department of Banking Supervision,
Central Office, Mumbai.
4. You are once again advised to reiterate the
instructions to the Statutory, Internal and Concurrent Auditors appointed by
your bank that only instances of fraud or fraudulent activity where the amount
involved is Rs. 100 lakhs or above should be reported to the Reserve Bank of
India, Department of Banking Supervision, Central Office, Mumbai and all other
instances should be reported to Regional office of the Reserve Bank of India,
Department of Banking Supervision under whose jurisdiction the Head Office of
the bank falls. Your bank may also ensure that, in future, our modified instructions
are followed meticulously.
5. Please acknowledge receipt.
Yours faithfully,
(S. Ramachandran)
Deputy General Manager
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