- within Law Department Performance topic(s)
RBI, vide notification dated July 15, 2024, has issued the RBI (Fraud Risk Management in NBFCs) Directions, 2024, which aims to provide a framework for all Non-Banking Financial Companies ("NBFCs") (including housing finance companies) in the upper layer, middle layer and in the base layer, with asset size of INR 500 crore (Indian Rupees five hundred crore) and above. These directions are issued with a view to providing a framework to NBFCs for prevention, early detection and timely reporting of incidents of fraud to law enforcement agencies, RBI and national housing bank. The key directions are:
- there must be a board approved policy on fraud risk management delineating roles and responsibilities of board/board committees and senior management of the NBFC. Special committee of the board to be formed for monitoring and follow-up of cases of frauds;
- NBFCs must identify appropriate early warning indicators for monitoring credit facilities/loan accounts and other financial transactions; and
- all RBI regulated entities will not provide any credit assistance to an entity whose account has been declared fraud for a period of 5 (five) years from satisfaction of all dues.
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