What changed
This master circular consolidates all existing instructions on fraud monitoring for NBFCs, updated as of June 30, 2011. It replaces the earlier master circular No. 149 and is now available on the RBI website. The circular reiterates the classification, reporting thresholds, and timelines for fraud reporting.
What it means for you
NBFCs must ensure strict adherence to fraud reporting timelines to prevent similar frauds elsewhere and avoid penal action under the RBI Act. The circular emphasizes staff accountability for delays and requires nomination of a General Manager-level official for return submissions. It also clarifies that nil reports are not required, but receipt confirmation is necessary.
What you must do
- Appoint a General Manager or equivalent official to handle all fraud-related returns.
- Report frauds of Rs. 1 lakh and above within three weeks of detection, with separate reporting for amounts Rs. 25 lakh and above to the Central Office.
- Submit initial fraud reports (FMR-1) and quarterly returns on frauds outstanding (FMR-2) and progress reports (FMR-3).
- Ensure quarterly and annual reviews of fraud cases by the board.
- Report frauds at overseas branches/offices to RBI as per the format and procedure in Paragraph 3.
Who it affects
All deposit-taking NBFCs including RNBCs, Senior management and compliance teams of NBFCs, Board of directors of NBFCs
What is the threshold for reporting frauds to RBI?
Frauds of Rs. 1 lakh and above must be reported. For frauds of Rs. 25 lakh and above, reports must be sent to the Central Office of RBI; for less than Rs. 25 lakh, to the Regional Office.