The Reserve Bank of India vide its notification dated 18.04.2016
reviewed an earlier notification DBR.No.BP.
BC.83/21.04.048/2014-2015 dated 01.04.2015 and issued amended
provisioning norms with respect to accounts declared as Fraud
Accounts to all scheduled commercial banks except the regional
The detailed guidelines for provisions pertaining to
Fraud Accounts are as under:-
The amount due to the banks or for which the bank is liable
(including the case of deposit accounts) should be provided
immediately after the fraud is detected and any financial
collateral adjustments with regard to basel iii capital regulations
shall be adjusted with regard to the fraud accounts.
The banks are now given an option to make such aforementioned
provisions over a period of four quarters commencing from the
quarter in which the fraud was detected.
If the banks take more than one financial year while providing
for the full provisioning being made, they should debit "other
reserves" by credit to provisions by the amount still not
provided at the end of financial year. The provisioning should be
completed in the subsequent quarters of the next financial year by
debiting the profit and loss account, after reversing the debits to
"other reserves". The "other reserves"
mentioned above are other than the reserves that are made under
section 17(2) of banking regulation act, 1949.
The banks shall also make disclosures about the number of fraud
accounts, amount involved, provisions made during the year and
unamortised provisions debited to "other reserves" at the
end of the year.
The banks should adhere to the guidelines issued on
classification and reporting of frauds contained in the circular
no. Dbs.Co.Cfmc. Bc.No.1/23.04.001/2014-2015 Dated 1st july, 2014
pertaining to "Frauds – classification and
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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