Master Direction – Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016
The Reserve Bank of India (RBI) has issued directions for Non-Banking Financial Companies (NBFCs) to monitor and report frauds.
The directions are applicable to all NBFCs, and the classification of frauds includes those involving ₹ 1 lakh and above, committed by unscrupulous borrowers, and those involving ₹ 1 crore and above.
NBFCs are required to report frauds to the RBI, including:
- Frauds involving ₹ 1 lakh and above
- Frauds committed by unscrupulous borrowers
- Frauds involving ₹ 1 crore and above
- Cases of attempted fraud
Quarterly returns are required, including a report on frauds outstanding and a progress report on frauds.
The Board of Directors of NBFCs must be informed of frauds, and a quarterly review of frauds must be conducted.
Guidelines are provided for reporting frauds to the police, including cases involving an amount of ₹ 1 lakh and above, committed by outsiders on their own and/or with the connivance of employees.
The directions aim to ensure that NBFCs have a robust system in place to detect, report, and prevent frauds.
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Download: Master Direction – Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016