Non Banking Financial Companies(NBFCs)

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Frauds – Future approach towards monitoring of frauds in NBFCs

RBI / 2007-2008/257
DNBS.PD.CC. No.112 /03.10.42/2007-08

March 5, 2008

All deposit taking NBFCs (including RNBCs)

Dear Sirs,

Frauds – Future approach towards monitoring of frauds in NBFCs

Please refer to Company Circular No. 106 dated September 04, 2007 on the captioned subject which has now been revised as under:

Para 2.2- Cases of ‘negligence and cash shortages’ and ‘irregularities in foreign exchange transactions’ referred to in items (d) and (f) above are to be reported as fraud if the intention to cheat / defraud is suspected / proved. However, the following cases where fraudulent intention is not suspected / proved at the time of detection, will be treated as fraud and reported accordingly:

a. cases of cash shortages more than Rs.10,000/- and
b. cases of cash shortages more than Rs. 5000/- if detected by management /auditor / inspecting officer and not reported on the occurrence by the persons handling cash.

2. These instructions are being issued in exercise of powers vested in the Bank under Section 45K and 45L of the RBI Act, 1934.

3. A copy of the updated guidelines is enclosed for meticulous compliance.

Yours faithfully

(P. Krishnamurthy)
Chief General Manager In-Charge


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