Fraud Monitoring in NBFCs
The Reserve Bank of India has outlined a comprehensive approach to monitor frauds in Non-Banking Financial Companies (NBFCs).
Classification of Frauds: Frauds are categorized into two types: those committed by outsiders with or without the involvement of NBFC staff, and those committed by NBFC employees involving NBFC funds.
Reporting Requirements:
Frauds involving Rs. 1 lakh and above, committed by outsiders, must be reported to the RBI and the police.
Frauds committed by NBFC employees, involving NBFC funds exceeding Rs. 10,000, must also be reported to the RBI and the police.
Quarterly Returns: NBFCs must submit quarterly returns to the RBI, detailing frauds committed during the period.
Board Reports: NBFCs must submit reports to their Board of Directors, highlighting frauds and the actions taken to prevent them.
Guidelines for Police Reporting: NBFCs must report frauds to the police, as per the guidelines outlined in the circular.
The circular aims to strengthen fraud monitoring and reporting in NBFCs, ensuring a more robust and transparent system.
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Download: Master Circular – Frauds -Future approach towards monitoring of frauds in NBFCs