RBI / 2005-06/190
DNBS (PD) C.C. No.59 /03.10.42/2005-06
October 26, 2005
All deposit taking NBFCs (including RNBCs)
Dear Sirs,
Frauds – Future approach towards
monitoring of frauds in NBFCs
As you may be aware, a ‘Frauds
Monitoring Cell’ (FMC) has commenced functioning within RBI with effect from
June 1, 2004. The Cell will be monitoring the frauds in commercial banks, financial
institutions, primary (urban) co-operative banks (UCBs), Local Area banks, NBFCs
etc. It has been decided to issue guidelines to NBFCs (including RNBCs) on classification
of frauds, approach towards monitoring of frauds and reporting requirements.
The individual cases of frauds involving amount less that Rs 25 lakhs may be
reported to the respective Regional Offices of DNBS in whose jurisdiction registered
office of the company is located, whereas individual cases of frauds involving
amount of Rs 25 lakhs and above may be reported to Frauds Monitoring Cell, Department
of Banking Supervision, Reserve Bank of India, Central Office, World Trade Centre,
Centre -1, Cuffe Parade, Mumbai- 400005.
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. Please acknowledge receipt
of the guidelines to the Regional Offices of DNBS in whose jurisdiction your
registered office is located.
Yours faithfully
Sd/-
(P. Krishnamurthy)
Chief General Manager In-Charge
Introduction
1.1 Incidence of frauds in NBFCs
is a matter of concern. While the primary responsibility for preventing frauds
lies with NBFCs themselves,
a reporting system for frauds is prescribed in the following paragraphs, which
may be adopted by NBFCs.
1.2 It is possible that frauds
are, at times, detected in NBFCs long after their perpetration. NBFCs should,
therefore, ensure that a reporting system is in place so that frauds are
reported without any delay. NBFCs should fix staff accountability in respect
of delays in reporting of fraud cases to the Reserve Bank.
1.3 Delay in reporting of frauds
and the consequent delay in alerting other NBFCs about the modus operandi
and issue of caution advices against unscrupulous borrowers could result
in similar frauds being perpetrated elsewhere. NBFCs may, therefore, strictly
adhere to the timeframe fixed in this circular for reporting fraud cases
to the Reserve Bank failing which NBFCs would be liable for penal action
as prescribed under the provisions of Chapter V of the RBI Act, 1934.
1.4 NBFCs should specifically
nominate an official of the rank of General Manager or equivalent who will
be responsible for submitting all the returns referred to in this circular.
1.5 It may be noted that NBFCs
are not required to submit ‘Nil’ reports to Frauds Monitoring Cell/Regional
Offices of Department of Non-Banking Supervision. At the same time enough
precautions may be taken by deposit-taking NBFCs to ensure that the cases
reported by them are duly received by Frauds Monitoring Cell/Regional Offices
of Department of Non-Banking Supervision as the case may be.
2. CLASSIFICATION OF FRAUDS
2.1 In order to have uniformity
in reporting, frauds have been classified as under based mainly on the provisions
of the Indian Penal Code:
a. Misappropriation and criminal
breach of trust.
b. Fraudulent encashment through
forged instruments, manipulation of books of account or through fictitious accounts
and conversion of property.
c. Unauthorised credit facilities
extended for reward or for illegal gratification.
d. Negligence and cash shortages.
e. Cheating and forgery.
f. Irregularities in foreign exchange
transactions.
g. Any other type of fraud not
coming under the specific heads as above.
2.2 Cases of 'negligence and cash
shortages' and ‘irregularities in foreign exchange transactions’ referred to
in item (d) and (f) above are to be reported as fraud if the intention to cheat/defraud
is suspected/ proved. Cases of cash shortage
up to Rs. 1,000/- reported on the same day by persons handling the cash and
where there is no suspicion of fraud, need not be reported as fraud. However,
cases of cash shortage involving more than Rs. 1,000/- and those detected by
the management/ inspecting officer, irrespective of the amount, may be reported
as fraud.
2.3 NBFCs having overseas branches/offices
should report all frauds perpetrated at such branches/offices also to the Reserve
Bank as per the format and procedure detailed under Paragraph 3 below.
3. Reporting of frauds to
Reserve Bank of India
3.1 Frauds involving Rs. 1 lakh
and above
3.1.1 Fraud reports should be submitted
in all cases of fraud of Rs. 1 lakh and above perpetrated through misrepresentation,
breach of trust, manipulation of books of account, fraudulent encashment of
FDRs unauthorised handling of securities charged to the NBFC, misfeasance, embezzlement,
misappropriation of funds, conversion of property, cheating, shortages, irregularities,
etc.
3.1.2 Fraud reports should also
be submitted in cases where central investigating agencies have initiated criminal
proceedings suo moto and/or where the Reserve Bank has directed that
they be reported as frauds.
3.1.3 Wherever information is available,
NBFCs may also report frauds perpetrated in their subsidiaries and affiliates/joint
ventures. Such frauds should, however, not be included in the report on outstanding
frauds and the quarterly progress reports referred to in paragraph 4 below.
3.1.4 The fraud reports in the
prescribed format should be sent to the Central Office (CO) of the Reserve Bank
of India, Department of Banking Supervision, Frauds Monitoring Cell where the
amount involved in fraud is Rs 25 lakhs and above and to Regional Office of
the Reserve Bank of India, Department of Non-Banking Supervision under whose
jurisdiction the Registered Office of the NBFC falls where the fraud amount
involved in fraud is less than Rs 25 lakh , in the format given in FMR
– 1, within three weeks from the date of detection.
3.2 Frauds committed by unscrupulous
borrowers
3.2.1 It is observed that a large
number of frauds are committed by unscrupulous borrowers including companies,
partnership firms/proprietary concerns and/or their directors/partners by various
methods including the following:
i. Fraudulent discount of instruments.
ii. Fraudulent removal of pledged
stocks/disposing of hypothecated stocks without the NBFC’s knowledge/inflating
the value of stocks in the stock statement and drawing excess finance.
iii. Diversion of funds outside
the borrowing units, lack of interest or criminal neglect on the part of borrowers,
their partners, etc. and also due to managerial failure leading to the unit
becoming sick and due to laxity in effective supervision over the operations
in borrowal accounts on the part of the NBFC functionaries rendering the advance
difficult of recovery.
3.2.2 In respect of frauds in borrowal
accounts involving an amount of Rs. 5 lakh and above, additional information
as prescribed under Part B of FMR – 1 may also be furnished.
3.3 Frauds involving Rs. 25 lakh
and above
In respect of frauds involving
Rs. 25 lakh and above, in addition to the requirements given at paragraphs 3.1
and 3.2 and above, NBFCs may report the fraud by means of a D.O. letter addressed
to the Chief General Manager-in-charge of the Department of Banking Supervision,
Reserve Bank of India, Frauds Monitoring Cell, Central Office and a copy endorsed
to the Chief General Manager-in-charge of the Department of Non-Banking Supervision,
Reserve Bank of India, Central Office within a week of such frauds coming to
the notice of the NBFC. The letter may contain brief particulars of the fraud
such as amount involved, nature of fraud, modus operandi in brief, name of the
branch/office, names of parties involved (if they are proprietorship/ partnership
concerns or private limited companies, the names of proprietors, partners and
directors), names of officials involved, and whether the complaint has been
lodged with the Police. A copy of the D.O. letter should also be endorsed to
the Regional Office of Reserve Bank, Department of Non-Banking Supervision under
whose jurisdiction the Registered Office of the NBFC is functioning.
3.4 Cases of attempted fraud
Cases of attempted fraud, where
the likely loss would have been Rs. 25 lakh or more, had the fraud taken place,
should be reported to the Central Office of the Reserve Bank, Department of
Banking Supervision, Frauds Monitoring Cell and a copy endorsed to Central Office
of the Reserve Bank, Department of Non-Banking Supervision indicating the modus
operandi and how the fraud was detected. Such cases should not be included in
the other returns to be submitted to the Reserve Bank.
4. Quarterly returns
4.1 Report on Frauds Outstanding
4.1.1 NBFCs should submit a copy
of the Quarterly Report on Frauds Outstanding in the format given in FMR
– 2 to the Regional Office of the Reserve Bank of India, Department of Non-Banking
Supervision under whose jurisdiction the Registered Office of the NBFC falls
irrespective of amount within 15 days of the end of the quarter to which it
relates.
4.1.2 Part – A of the report covers
details of frauds outstanding as at the end of the quarter. Parts B and C of
the report give category-wise and perpetrator-wise details of frauds reported
during the quarter respectively. The total number and amount of fraud cases
reported during the quarter as shown in Parts B and C should tally with the
totals of columns 4 and 5 in Part – A of the report.
4.1.3 NBFCs should furnish a certificate,
as part of the above report, to the effect that all individual fraud cases of
Rs. 1 lakh and above reported to the Reserve Bank in FMR – 1
during the quarter have also been put up to the NBFC’s Board and have been incorporated
in Part – A (columns 4 and 5) and Parts B and C of FMR – 2.
4.2 Progress Report on Frauds
4.2.1 NBFCs should furnish case-wise
quarterly progress reports on frauds involving Rs. 1 lakh and above in the format
given in FMR – 3 to the Central Office (CO) of the Reserve
Bank of India, Department of Banking Supervision, Frauds Monitoring Cell where
the amount involved in fraud is Rs 25 lakhs and above and to Regional Office
of the Reserve Bank of India, Department of Non-Banking Supervision under whose
jurisdiction the Registered Office of the NBFC falls where the fraud amount
involved in fraud is less than Rs 25 lakh within 15 days of the end of the quarter
to which it relates.
4.2.2 In the case of frauds where
there are no developments during a quarter, a list of such cases with a brief
description including name of branch and date of reporting may be furnished
as per FMR – 3.
5. Reports to the board
5.1 Reporting of Frauds
5.1.1 NBFCs should ensure
that all frauds of Rs. 1 lakh and above are reported to their Boards promptly
on their detection.
5.1.2 Such reports should,
among other things, take note of the failure on the part of the concerned
officials, and consider initiation of appropriate action against the officials
responsible for the fraud.
5.2 Quarterly Review of Frauds
5.2.1 Information relating
to frauds for the quarters ending March, June and September may be placed
before the Board of Directors during the month following the quarter to
which it pertains.
5.2.2 These should be accompanied
by supplementary material analysing statistical information and details
of each fraud so that the Board would have adequate material to contribute
effectively in regard to the punitive or preventive aspects of frauds.
5.2.3 All the frauds involving
an amount of Rs 25 lakh and above should be monitored and reviewed by
the Audit Committee of the Board (ACB) or if ACB is not there, other Committee
of the Board of NBFCs. The periodicity of the meetings of the Committee
may be decided according to the number of cases involved. However, the
Committee should meet and review as and when a fraud involving an amount
of Rs 25 lakh and above comes to light.
5.3 Annual Review of Frauds
5.3.1 NBFCs should conduct
an annual review of the frauds and place a note before the Board of Directors
for information. The reviews for the year-ended December may be put up
to the Board before the end of March the following year. Such reviews
need not be sent to RBI. These may be preserved for verification by the
Reserve Bank’s inspecting officers.
5.3.2 The main aspects which
may be taken into account while making such a review may include the following:
a. Whether the systems
in the NBFC are adequate to detect frauds, once they have taken
place, within the shortest possible time.
b. Whether frauds are
examined from staff angle.
c. Whether deterrent
punishment is meted out, wherever warranted, to the persons found
responsible.
d. Whether frauds have
taken place because of laxity in following the systems and procedures
and, if so, whether effective action has been taken to ensure that
the systems and procedures are scrupulously followed by the staff
concerned.
e. Whether frauds are
reported to local Police, as the case may be, for investigation.
5.3.3 The annual reviews
should also, among other things, include the following details:
a. Total number of
frauds detected during the year and the amount involved as compared
to the previous two years.
b. Analysis of frauds according
to different categories detailed in Paragraph 2.1 and also the different business
areas indicated in the Quarterly Report on Frauds Outstanding (vide FMR
– 2).
c. Modus operandi of
major frauds reported during the year along with their present position.
d. Detailed analyses
of frauds of Rs. 1 lakh and above.
e. Estimated loss to
the NBFC during the year on account of frauds, amount recovered
and provisions made.
f. Number of cases
(with amounts) where staff are involved and the action taken against
staff.
g. Time taken to detect
frauds (number of cases detected within three months, six months
and one year of their taking place).
h. Position with regard
to frauds reported to Police.
i. Number of frauds
where final action has been taken by the NBFC and cases disposed
of.
j. Preventive/punitive
steps taken by the NBFC during the year to reduce/minimise the incidence
of frauds.
6. Guidelines for reporting frauds to Police
NBFCs should follow the following
guidelines for reporting of frauds such as unauthorised credit facilities
extended by the NBFC for illegal gratification, negligence and cash shortages,
cheating, forgery, etc. to the State Police authorities:
a. In dealing with cases of fraud/embezzlement,
NBFCs should not merely be actuated by the necessity of recovering expeditiously
the amount involved, but should also be motivated by public interest and the
need for ensuring that the guilty persons do not go unpunished.
b. Therefore, as a general rule,
the following cases should invariably be referred to the State Police:
i. Cases of fraud involving an
amount of Rs. 1 lakh and above, committed by outsiders on their own and/or
with the connivance of NBFC staff/officers.
ii. Cases of fraud committed
by NBFC employees, when it involves NBFC funds exceeding Rs. 10,000/-.
FMR – 1
Report on Actual or
Suspected Frauds in NBFCs
(Vide Paragraph 3)
Part A: Fraud Report
1.
|
Name of the NBFC
|
|
|
|
|
2.
|
Fraud number
|
|
|
|
|
3.
|
Details of the branch
|
|
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(a) Name of the branch
|
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(b) Branch type
|
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(c) Place
|
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(d) District
|
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(e) State
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4.
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Name of the Principal party/account
|
|
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|
5.a
|
Area of operation where the fraud has occurred
|
|
|
|
|
5.b
|
Whether fraud has occurred in a borrowal
account ?
|
Yes/No
|
|
|
|
6.a
|
Nature of fraud
|
|
6.b
|
Whether computer is used in committing
the fraud?
|
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6.c
|
If yes, details thereof
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7.
|
Total amount involved(Rs. In lakh)
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8.a
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Date of occurrence
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b
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Date of detection
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c
|
Reasons for delay, if any, in detecting
the fraud
|
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d
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Date on which reported to RBI
|
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|
|
e
|
Reasons for delay, if any, in reporting
the fraud to RBI
|
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|
|
9.a
b
|
Brief history
modus operandi
|
|
|
|
|
10.
|
Fraud committed by
|
|
A
|
Staff
|
Yes/No
|
|
|
|
B
|
Customers
|
Yes/No
|
|
|
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C
|
Outsiders
|
Yes/No
|
|
|
|
11.a
|
Whether the controlling
office (Regional/Zonal) could detect the fraud by a scrutiny of control
returns, if any
|
Yes/No
|
|
|
|
b
|
Whether there is need to
improve the information system?
|
Yes/No
|
|
|
|
12.a
|
Whether internal inspection/
audit (including concurrent audit) was conducted at the branch(es) during
the period between the date of first occurrence of the fraud and its
detection?
|
Yes/No
|
|
|
|
b
|
If yes, why the fraud could
not have been detected during such inspection/audit.
|
|
|
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C
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What action has been taken
for non-detection of the fraud during such inspection/audit
|
|
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|
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13.
|
Action taken/proposed to be taken
|
|
a
|
Complaint with Police
|
|
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i)Whether any complaint
has been lodged with the Police?
|
Yes/No
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ii)If yes, name of the
Police Station.
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Date of reference
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Present position of the
case
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Date of completion of
Police investigation
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Date of submission of investigation
report by Police
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iii) If not reported to
Police, reasons therefore
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b
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Recovery suit with Court/Others
|
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i) Date of filing
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ii) Present position
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c
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Insurance claim
|
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|
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i) Whether any claim has
been lodged with an insurance company
|
Yes/No
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ii) If not, reasons therefor
|
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|
d
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Details of staff-side action
|
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i) Whether any internal
investigation has been/is proposed to be conducted
|
Yes/No
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ii) If yes, date of completion
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iii) Whether any departmental
enquiry has been/is proposed to be conducted
|
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iv) If yes, give details
as per format given below:
|
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v) If not, reasons therefor
|
|
No.
|
Name
|
Desgn.
|
Whether suspen-ded/Dt. of
suspension
|
Date of issue of charge
sheet
|
Date of commen-cement of
domestic inquiry
|
Date of comple-tion of inquiry
|
Date of issue of final orders
|
Punish-ment awar-ded
|
Details of prosecution/
conviction/ acquittal, etc.
|
|
|
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|
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|
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e
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Steps taken/proposed to
be taken to avoid such incidents
|
|
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14.
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- Total amount recovered
|
|
|
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|
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i) Amount recovered from
party/parties concerned
|
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|
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ii) From insurance
|
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iii) From other sources
|
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Extent of loss to the NBFC
|
|
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Provision held
|
|
|
Amount written off
|
|
|
|
|
15.
|
Suggestions for consideration
of RBI
|
|
Part B: Additional Information on Frauds in Borrowal
Accounts
(This part is required to be completed
in respect of frauds in all borrowal accounts involving an amount of Rs. 5 lakh
and above)
Sr. No.
|
Type of party
|
Name of party/account
|
Party Address
|
|
|
|
|
|
|
|
|
Borrowal accounts details:
Party Sr. No.
|
Name of party/account
|
Borrowal account Sr. No.
|
Nature of Account
|
Date of Sanction
|
Sanctioned limit
|
Balance outstanding
|
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Borrowal account Director/proprietor details:
Name of party/account
|
Sr.No.
|
Name of Director/Proprietor
|
Address
|
|
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Associate Concerns:
Name of party/account
|
Sr. No.
Associate
Concern
|
Name of Associate Concern
|
Address
|
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|
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Associate Concern Director/proprietor details:
Name of Associate Concern
|
Sr. No.
|
Name of Director
|
Address
|
|
|
|
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|
|
|
|
FMR – 2
Quarterly Report on Frauds
Outstanding
(Vide Paragraph 4.1)
Name of the NBFC ______________________________________
Report for the quarter ended _____________________________
Domestic Overseas
Part – A: Frauds Outstanding
(Amount in Rs. lakh)
Category
|
Cases outstanding as at
the end of the previous quarter
|
New cases reported during
the current quarter
|
Cases closed during the
current quarter
|
Cases outstanding as at
the end of the quarter
|
Total amount
recovered
|
Provision held for cases outstanding as
at the end of the Qtr.
|
Amount Recovered during the current Qtr.
|
Amount Written off during the current quarter
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
(2+4-6)
|
Amount
(3+5-7)
|
Amount
|
Amount
|
Amount
|
Amount
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
11
|
12
|
13
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
- Recurring
- Daily
- Term
- Others
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-resident accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances
- Cash credit
- Term Loans
- Bills
- Others
|
|
|
|
|
|
|
|
|
|
|
|
|
Inter-branch accounts
|
|
|
|
|
|
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|
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|
|
|
|
Off-balance sheet
- Letters of credit
- Guarantees
- Co-acceptance
- Others
|
|
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|
|
|
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Others
|
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Total
|
|
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|
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|
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|
|
|
Note: For Indian NBFCs with overseas
offices/branches, the above figures relate to the domestic position. The
figures in respect of overseas branches/offices may be shown in a separate
sheet in the same format as above.
Part – B: Category-wise classification of frauds
reported during the quarter ______________
Name of the NBFC ______________________________________
Category
|
Misappropriation and criminal
breach of trust
|
Fraudulent encashment/ manipulation
of books of account and conversion of property
|
Unauthorised credit facility
extended for illegal gratification
|
Negligence and cash shortages
|
Cheating and forgery
|
Irregularities in foreign
exchange transactions
|
Others
|
Total
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
Less than Rs. 1 lakh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rs. 1 lakh and above but less than Rs. 25
lakh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rs. 25 lakh and above
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Part – C: Perpetrator-wise classification of
frauds reported during the quarter ______________
Name of the NBFC ______________________________________
Category
|
Staff
|
Customers
|
Outsiders
|
Staff and Customers
|
Staff and Outsiders
|
Customers and Outsiders
|
Staff, Customers and Outsiders
|
Total
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
No.
|
Amt.
|
Less than Rs. 1 lakh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rs. 1 lakh and above but less than Rs. 25
lakh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rs. 25 lakh and above
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Note: 1. The above category-wise
classification is mostly based on various provisions of the Indian Penal Code.
2. All amounts may be furnished in Rs. lakh
up to two decimals.
Certificate
Certified that all frauds of Rs. 1 lakh and above
reported to the Reserve Bank during the last quarter have also been reported
to the NBFC’s Board
and have been incorporated in Part A (Columns 4 and 5) and Parts B and C above.
Signature:
Name and Designation:
Place:
Date:
FMR – 3
Quarterly Progress Report
on Large Value Frauds
(Vide Paragraph 4.2)
Name of the NBFC: ________________________________
Statement for quarter ended _______________________
Part A: Summary information
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Number
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Amount involved
(Rs. In lakh)
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1.
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Cases outstanding
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2.
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Cases where there is no progress
(furnish case-wise details as per format at Part B below)
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3.
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Cases where there is progress
(furnish case-wise details as per format at Part C below)
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Part – B: Details of cases where
there is no progress
No.
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Name of branch
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Fraud No.
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Name of party/account
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Amount
(Rs. in lakh)
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Part – C: Case-wise details of
progress
Name of party/account: ____________________________________
Name of branch/office: ____________________________________
Amount involved
(Rs in lakh) ______________________________
Fraud No : ______________________________
1.
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Date of first reporting
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2.a
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Date of filing recovery suit with DRT/Others
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b
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Present position
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3.
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Recoveries made up to the end of the last
quarter (Rs. in lakh)
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4.
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Recoveries made during the quarter (Rs.
In lakh)
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a) From party/parties concerned
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b) From insurance
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c) From other sources
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5.
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Total recoveries (3+4) (Rs. in lakh)
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6.
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Loss to the NBFC (Rs in lakh)
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7.
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Provision held (Rs in lakh)
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8.
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Amount written off (Rs in lakh)
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9.
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a) Date of reporting case to Police
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b) Date of completion of Police investigation
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c) Date of submission of investigation
report by Police
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10.
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Details of staff-side action
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No.
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Name
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Desgn.
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Whether suspen-ded/Dt. of
suspens-ion
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Date of issue of charge
sheet
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Date of commen-cement of
domestic inquiry
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Date of comple-tion of inquiry
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Date of issue of final orders
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Punish-ment awar-ded
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Details of prosecution/conviction/acquittal,
etc.
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1.
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2.
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3.
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4.
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11.
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Other developments
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12.
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Whether case closed during the quarter
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Yes/No
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13.
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Date of closure:
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Instructions for compiling the
Fraud Report (FMR 1):
Fraud number: This has been introduced with a
view to facilitate computerisation and cross-reference. The number will be an
alphanumeric field consisting of the following: four alphabets (to indicate
name of NBFC), two digits for the year (02, 03, etc.), two digits for the quarter
(01 for January - March quarter, etc.) and the final four digits being a distinctive
running number for the fraud reported during the quarter.
Name of the branch: In case the fraud relates
to more than one branch, indicate the name of only one branch where the amount
involved has been the highest and/or which is mainly involved in following up
the fraud. The names of the other branches may be given in the brief history/modus
operandi against item number 9.
Name of party: A distinctive name may be given
to identify the fraud. In the case of frauds in borrowal accounts, name of the
borrowers may be given. In the case of frauds committed by employees, the name(s)
of the employee(s) could be used to identify the fraud. Where fraud has taken
place, say, inter-branch account, and if it is not immediately possible to identify
the involvement of any particular employee in the fraud, the same may be identified
merely as "Fraud in inter-branch account".
Area of operation where the fraud has occurred:
Indicate the relevant area out of those given in column 1 of statement FMR 2
(Part A) (Cash; Deposits (Term); Non-resident accounts; Advances (Cash Credit/Term
Loans/Bills/Others); Foreign exchange transactions; Inter-branch accounts; Cheques/demand
drafts, etc.; accounts; Off-balance sheet (Letters of credit/Guarantee/Co-acceptance/Others);
Others)
Nature of fraud: Select the number of the relevant
category from the following which would best describe the nature of fraud:
(1) Misappropriation and criminal breach of trust,
(2) Fraudulent encashment through forged instruments/manipulation of books of
account or through fictitious accounts and conversion of property,
(3) Unauthorised credit facilities extended for reward or for illegal gratification,
(4) Negligence and cash shortages,
(5) Cheating and forgery,
(6) Irregularities in foreign exchange transactions,
(7) Others.
Total amount involved: Amounts should, at all
places, be indicated in Rs. lakh up to two decimal places.
Date of occurrence: In case it is difficult to
indicate the exact date of occurrence of fraud (for instance, if pilferages
have taken place over a period of time, or if the precise date of a borrower's
specific action, subsequently deemed to be fraudulent, is not ascertainable),
a notional date may be indicated which is the earliest likely date on which
the person is likely to have committed the fraud (say, January 1, 2002, for
a fraud which may have been committed anytime during the year 2002). The specific
details, such as the period over which the fraud has occurred, may be given
in the history/modus operandi.
Date of detection: If a precise date is not available
(as in the case of a fraud detected during the course of an inspection/audit
or in the case of a fraud being reported such on the directions of the Reserve
Bank), a notional date on which the same may be said to have been recognised
as fraud may be indicated.
Date of reporting to RBI: The date of reporting
shall uniformly be the date of sending the detailed fraud report in form FMR
1 to the RBI and not any date of fax or DO letter that may have preceded it.
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