RBI:
FRAUDS- CLASSIFICATION AND REPORTING
Notification: RBI/2012-13/433
UBD CO BPD (PCB) Cir. No.41/12.05.001/2012-13
UBD CO BPD (PCB) Cir. No.41/12.05.001/2012-13
Dated: 08/03/2013
As per para 3.5 of Master Circular Master Circular
UBD.CO.BPD. (PCB) MC No. 17/12.05.001/2012-13 dated July 02, 2012, cases of attempted fraud, where
likely loss would have been Rs. 25 lakhs or more had the fraud taken place,
should be reported by the bank to the Fraud Monitoring Cell, Department of
Banking Supervision, Reserve Bank of India, Central Office, Mumbai within two
weeks of the bank coming to know that the attempt to defraud the bank failed or
was foiled.
On review and as a part of
rationalization of process and procedures, it has been decided to amend para
3.5 of the above Master Circular on ‘Frauds- Classification and Reporting’.
Accordingly, the practice of reporting attempted fraud, where likely loss would
have been Rs. 25 lakhs or more to Fraud Monitoring Cell, Department of Banking
Supervision, Reserve Bank of India, Central Office, Mumbai may be discontinued
from the date of the circular.
However, the bank should continue to
place the individual cases of attempted fraud involving Rs.25 lakhs or more
above before the Audit Committee of its Board as hitherto as per the
instructions contained in the above mentioned Master Circular. The report
containing attempted frauds which is to be placed before the Audit Committee of
the Board should cover the following viz.
- The modus of operandi of attempted fraud
- How the attempt did not materialize into a
fraud or how the attempt failed/ or was foiled.
- The measures taken by the bank to strengthen
the existing systems and controls.
- New systems and controls put in place in the
area where fraud was attempted,
- In addition yearly consolidated review of such
cases detected during the year containing information such as area of
operations where such attempts were made, effectiveness of new process and
procedures put in place during the year, trend of such cases during the
last three years, need for the further change in process and procedures,
if any, etc as on March 31 every year starting from the year ending March
31, 2013 within three months from the end of the relative year.
Further, it has been decided to amend
para 5.2.1, 5.2.3, and 5.3.1 of above Master Circular relating to reporting of
fraud cases to respective Regional Offices of Reserve Bank of India as under;
5.2 Quarterly Review of Frauds
5.2.1 Information relating to frauds
for the quarters ending June, September and December may be
placed before the Audit Committee of the Board of Directors during the month
following the quarter, to which it pertains, irrespective of whether or not
these are required to be placed before the Board/ Management Committee in terms
of the Calendar of Reviews prescribed by the Reserve Bank of India.
5.2.3 A separate review for the quarter
ending March is not required in view of the Annual Review for
the year ending March prescribed below;
5.3 Annual Review of Frauds
5.3.1 Banks should conduct an annual
review of the frauds and place a note before the Board of Directors for
information. The review for the year ended March may be placed
before the Board before the end of next quarter. i.e. for the quarter
ended June 30th.
Regards
CA. Mona Singhal
Partner
Arpit Gupta & Associates
Chartered Accountants
701, Nirmal Tower,
26, Barakhamba Road,
Connaught Place, Delhi-110001
Mobile:- +91-9873082769
Website: www.caaga.co.in
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