RBI And Financial Fraud

RBI focus to plug financial fraud-The Telegraph-18th June 2014

Reserve Bank of India (RBI) is in the process of reviewing the regulatory framework for non-banking financial companies to control frauds.   A meeting with 42 non-banking financial companies of both Bihar and Jharkhand was held in Patna on Tuesday. RBI regional director M.K. Verma said: “From May 2014, the company has to get a proper permission from the RBI before taking over any company or merging into other. This will enable us in regulating and updating our book. There are unincorporated bodies, which undertake financial activities and remain unregulated.”   In order to keep an eye on new players in the market, the RBI asks for an annual database of companies. “There are entities, who camouflage deposits in some other names and thus illegally accepting deposits. There are many such companies, which get themselves registered and stop working after a while. The companies, which do not give us the annual database about their entities, are considered to be vanishing companies. The number of vanishing companies has risen to 200 in this region,” said Verma.   He added: “We want to make it more tight so that it is easy for everybody to understand what is a deposit, who can and who cannot accept it. In order to keep an eye on the camouflage accounts, the company needs to regularly update the ‘know your customer (KYC)’ database.”   Link The telegraph