April 1, 2015
All Scheduled Commercial Banks
(Excluding Regional Rural Banks)
Provisioning pertaining to Fraud Accounts
Please refer to the guidelines 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.
2. On a review, it has been decided to prescribe a uniform provisioning norm in respect of all cases of fraud, as under:
3. We reiterate that 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’.
Chief General Manager-in-Charge