Reserve
Bank of India vide its :-
Notification
No RBI/2014-15/535 DBR.No.BP.BC.83/21.04.048/2014-15 dt.April 1, 2015,
addressed to All Scheduled Commercial Banks (Excluding Regional Rural Banks),
has laid down uniform provisioning rules
for fraud accounts.
The basic guidelines are compiled in
paragraph 4.2.9 of Master Circular on Prudential Norms on Income Recognition,
Asset Classification and Provisioning pertaining to Advances dated July 1,
2014, in terms of which, in accounts where there are potential threats for
recovery on account of erosion in the value of security or non-availability of
security and existence of other factors such as frauds committed by borrowers,
the asset classification, and consequent provisioning, depends upon the
realisable value of security.
The
uniform provisioning norm in respect of all cases of fraud, are as under:
01) The
entire amount due to the bank (irrespective of the quantum of security held
against such assets), or for which the bank is liable (including in case of
deposit accounts), is to be provided for over a period not exceeding four
quarters commencing with the quarter in which the fraud has been detected;
02)
However, where there has been delay, beyond the
prescribed period, in reporting the fraud to the Reserve Bank, the entire
provisioning is required to be made at once. In addition, Reserve Bank of India
may also initiate appropriate supervisory action where there has been a delay
by the bank in reporting a fraud, or provisioning there against.
At the
same time, banks must scrupulously
adhere to the guidelines contained in circular
DBS.CO.CFMC.BC.No.1/23.04.001/2014-15 dated July 1, 2014 on ‘Frauds –
Classification and Reporting’.
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