What changed
RBI observed that some NBFCs were not filing FMR-1 for frauds of Rs 25 lakh and above, delaying caution advice issuance. Now, FMR-1 must be sent to DBS Central Office within 21 days for all such cases, with a copy to the regional DNBS office. FMR-3 quarterly reports should only be filed with DBS CO for frauds of Rs 25 lakh or more; smaller frauds go only to the regional office. Fraud closure now requires prior approval from the regional DNBS office and completion of police/CBI disposal, staff accountability, recovery/write-off, insurance settlement, and system review.
What it means for you
NBFCs-ND-SI must tighten internal fraud detection and reporting processes to avoid delays. The stricter closure norms ensure fraud cases are not prematurely closed, reducing systemic risk. NBFCs should expect more rigorous follow-up from RBI on pending fraud cases, especially those involving high amounts.
What you must do
- Ensure FMR-1 for frauds of Rs 25 lakh and above is filed with DBS Central Office within 21 days of detection, with a copy to the regional DNBS office.
- File FMR-3 quarterly reports only with DBS CO for frauds of Rs 25 lakh or more; for smaller frauds, submit only to the regional DNBS office.
- Do not close any fraud case without prior approval from the regional DNBS office and completion of all required actions: police/CBI disposal, staff accountability, recovery/write-off, insurance settlement, and system review.
- Vigorously pursue pending fraud cases with CBI, police, or courts for final disposal.
- Review and update internal fraud monitoring systems to ensure timely and accurate reporting.
Who it affects
All Non-Deposit taking NBFCs-ND-SIs
What is the deadline for filing FMR-1 for frauds of Rs 25 lakh and above?
FMR-1 must be filed within 21 days from the date of detection of the fraud.
Can we close a fraud case if the police complaint is still pending?
No, fraud cases can only be closed after prior approval from the regional DNBS office and completion of all required actions, including final disposal by CBI/police/court, staff accountability, recovery/write-off, insurance settlement, and system review.
Where should we file FMR-3 for frauds involving less than Rs 25 lakh?
FMR-3 for frauds involving less than Rs 25 lakh should be filed only with the Regional Office of DNBS under whose jurisdiction the NBFC's registered office falls, not with DBS Central Office.