Overview
The Fraud Prevention policy has been framed, in accordance with the requirements of RBI Master
Direction - Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016 and RBI Circular on
Introduction of XBRL based online fraud-reporting system for NBFCs dated June 06, 2022, to
establish a system for prevention, detection, investigation and reporting of fraud, against Premium
finlease finance Private Limited (herein after referred to as “Premium finlease finance” or “the
Company”) keeping in view the following objectives:
To establish procedures and controls that will aid in the detection and prevention
of fraud
To provide guidance to Premium finlease finance employees in fraud prevention,
identification and detection
To develop internal controls and to investigate frauds
To promptly record frauds and report frauds, as required, to RBI and
other agencies
To provide necessary training to Premium finlease finance staff for prevention and
detection of frauds.
SCOPE OF POLICY
This policy applies to any fraud or suspected fraud involving employees as well as outside agencies
and Persons having Business Relationship with Premium finlease finance Private Limited. The liberty
of the policy shall also cover theft, burglary, dacoity and robbery cases which shall also reported to
the Reserve Bank of India in accordance with the guidelines.
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Policy Liberty
OBJECTIVE OF POLICY
The Policy has been established to outline the requirements for the development of controls that
will assist in the detection, prevention and management of Fraud.
This Policy must be applied to any Fraud, or suspected Fraud, involving any member of the Boards
of Directors, the Chief Executive Officers, the Management teams or staff of Premium finlease
finance, as well as minority shareholders and all others who conduct business with Premium finlease
finance, such as customers, third party agents and representatives, including consultants,
contractors, suppliers, vendors, subcontractors and agents.
The Policy is designed to fulfil the following objectives:
• Maintain the highest standard of ethics, professional conduct and fiduciary duty
& responsibility;
• Protect Premium finlease finance’s funds and other assets;
• Secure Premium finlease finance's businesses;
• Protect the reputation of Premium finlease finance and its employees
THE POLICY
This document outlines Premium finlease finance's policy concerning fraud and provides guidelines
for the implementation and enforcement of Premium finlease finance Fraud Prevention Policy
referred to herein after as the ‘Policy’. This policy and any future amendments are subject to the
Board of Directors’ approval.
The company shall follow the policy at all levels. Each member of the management team will be
familiar with the types of improprieties that might occur within his or her area of responsibility, and
be alert for any indication of irregularity.
The Internal Audit Department of the company shall be responsible for the detection of frauds during
the course of its Internal Audits and reporting thereof and to recommend necessary internal controls
for fraud prevention. The frauds being detected during the course of audit by the internal auditors
shall be covered in the scope of Executive Summary report of the Internal Audit Department and
shall be placed before the Audit Committee of the Board for further direction.
Any irregularity that is detected or suspected by any staff member or the management team must
be reported immediately to the Head of Internal Audit Department, who shall in turn investigate the
matter in detail and decide the future course of action including reporting thereof and the imposition
of penalties on the involved staff members or change in the system and controls, in consultation with
the Managing Director, Operations Head or other departmental heads, as may be
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Policy Objective
About the policy
required. Information concerning the status of an investigation will be kept confidential. The
complainant or the staff who detects the fraud in the course of his office duties shall be instructed:
• Not to contact the suspected individual directly, so as to determine facts.
• Not to discuss the case, facts, suspicions, or allegations with any other person
The company already has a Board approved 'Vigil Mechanism and Whistle Blower policy.
Premium finlease finance Private Limited shall abide by regulatory guidelines and fraud
reporting requirements, prescribed by the Regulatory Authorities.
ACTIONS CONSTITUTING FRAUD
A Fraud is a willful act intentionally committed by an individual by deception, suppression, cheating
or any other fraudulent or any other illegal means, thereby, causing wrongful gain to oneself or to
any other individual and wrongful loss to others. Some examples of fraudulent activity are:
Misappropriation of funds, or other assets
Impropriety in the handling or reporting of money or financial transactions
Accepting or seeking anything of material value from contractors, vendors, or persons
providing services/materials to the Company.
Misappropriation and criminal breach of trust
Fraudulent encashment through forged instruments, manipulation of books of
account or through fictitious accounts and conversion of property
Unauthorised credit facilities extended for reward or for illegal gratification.
Negligence and cash shortages
Cheating and forgery
Irregularities in foreign exchange transactions
Any other type of fraud not coming under the specific heads as above.
Cases of ‘negligence and cash shortages’ and ‘irregularities in foreign exchange transactions’
are to be reported as fraud if the intention to cheat / defraud is suspected / proved.
In the following cases where fraudulent intention is not suspected / proved, at the time of
detection, the matter will be treated as fraud and reported accordingly: (a) Cases of cash
shortages more than ₹10,000/- and (b) Cases of cash shortages more than ₹5000/- if
detected by management /auditor / inspecting officer and not reported on the occurrence by
the persons handling cash.
Actions which are in violation of the provisions of the IT Act, 2000 and IT (Amendment)
Act, 2008
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Constituting fraud action
DETECTION AND INVESTIGATION OF FRAUD
The Head (Internal Audit) has the primary responsibility for the detection / investigation of all
actual / suspected fraudulent acts as defined in the policy. However, the responsibility of reporting
of any fraud shall not be limited to the Head of the Internal Audit Department, and any
person/employee of the company who comes across any fraudulent activity shall promptly report
the activity to the Internal Audit Department, to avoid occurrence of any fraud.
The person detecting the fraud or the investigating team must ensure proper procedures so as to
avoid mistaken accusations or alerting suspected individuals that an investigation is under way. An
employee who discovers or suspects fraudulent activity will inform the Audit Head immediately.
The reporting individual will be advised:
• Not to contact the suspected individual directly, in an effort to determine facts.
• Not to discuss the case, facts, suspicions, or allegations with any other person
FRAUD INVESTIGATION PROCEDURE
The Internal Audit Head shall, on the receipt of any complaint pertaining to fraud assess the facts
reported (preliminary review) in order to understand the possible level (internal/external, level of the
internal staff involvement, etc.) and the extent of any potential breach, as well as the severity of the
case reported. He shall, on the basis of the primary enquiry decide the further course of action to be
carried out and shall commence the investigation in consultation with the Managing Director and
other related departments.During the course of Investigation the following procedure shall be
adopted:
• Obtain copy of concern /complaint or reported breach;
• Identify, secure and gather data in whatever form, including the changing of locks
and system access (where necessary and/or applicable);
• Obtain and analyse documents;
• Conduct initial validation of the information received to understand whether or not the
claims are valid
• Perform data analytics on structured/unstructured data;
• Interview relevant internal and external individuals, document the interview and obtain
their acknowledgement on the facts;
• Secure documents and relevant evidence related to the suspected Fraud, such as contents of the
suspect’s office or workstation, personal computer, diary and files including all personal
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Investigation & exposure of fraud
Procedure of investigation
documents, where possible/applicable;
• Securing / preserving the various related documents such as documents pertaining to testing
procedures, financial data records, records of interviews and testimonies, consultation memo,
related emails or other correspondences etc.
• Securing evidence – documents/evidence must be protected so that nothing is destroyed
and so that they are admissible in legal proceedings.
REPORTING, RECORDING AND MONITORING OF FRAUDULEN
The frauds being detected and investigated by the internal auditors shall be covered in the scope of
Executive Summary report of the Internal Audit Department and shall be placed before the Audit Committee
of the Board. It shall be ensured that FIR is filed with the police authorities at the earliest. The recording
of the fraud cases shall be made by the compliance team in the fraud register on the basis of report of
internal auditor. The Internal Audit Department of the company shall, in its internal audit report, also
comment upon the status of any update on recovery etc. on any fraud. Cases of attempted frauds involving
Rs. 25 lakh or more shall also be reported to the Audit committee. The Audit Committee and Board shall
review the status of fraud cases on a quarterly and annual basis.
Decisions to prosecute or refer the examination results to the appropriate law enforcement and/or
regulatory agencies for independent investigation will be made in conjunction with legal counsel and
senior management, as will final decisions on disposition of the case.
The company shall report the following frauds to the Reserve Bank of India in accordance with Chapter
IV of the RBI Master Direction - Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016:
a) Frauds involving ₹ 1 lakh and above
b) Frauds involving ₹ 1 crore and above
c) Frauds committed by unscrupulous borrowers
The above frauds shall be reported in the prescribed Form FMR-1 in XRBL mode through online fraud
reporting system, to the Regional Office of the Department of Non-Banking Supervision of the Bank under
whose jurisdiction the Registered Office of the applicable NBFC falls, within three weeks (21 days) from
the date of detection of the fraud. Further, frauds involving Rs. 1 crore and above shall also be reported
by means of a D.O. letter addressed to the Chief General Manager-in-charge of the Department of Banking
Supervision, Reserve Bank of India, Frauds Monitoring Cell, Central Office Bengaluru and a copy endorsed
to the Chief General Manager-in-charge of the Department of Non-Banking Supervision, Reserve Bank of
India, Central Office within three weeks of detection of fraud.
The developments in the reported frauds shall be updated to RBI in XBRL mode through online fraud
reporting system on as and when basis i.e. whenever any development has occurred in the format
prescribed in FMR-3.
The Company shall also submit a monthly certificate in respect of fraud cases in the prescribed format
to FMG, DoS, CO, RBI, Bengaluru with a copy to respective SSM within seven days from the end of
every month.
Further the cases of theft, burglary, dacoity and robbery are required to be reported in form FMR-4 in
XRBL mode through online fraud reporting system within 15 days from the end of every quarter to
which it relates. The company shall submit “NIL” FMR-4 in case there are no instances of theft,
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Fraudlent acts of reporting, recording & monitoring
burglary, dacoity and robbery, during the reporting quarter.
In addition to the above, on the occurrence of cases of theft, burglary, dacoity and robbery
immediate reporting through e-mail shall be made to following authorities in the prescribed format:
(i) The General Manager, Fraud Monitoring Group, Department of Supervision, Central Office,
RBI Bengaluru- 560001.
(ii) Regional Office of Reserve Bank of India, Department of Supervision of the State in
which theft, burglary, dacoity and robbery has taken place
(c) PENALTIES ON STAFF INVOLVED IN FRAUD
If after investigation, it is found that the staff member was involved in the fraud, strict action shall
be taken against the culprits. The amount involved in fraud, as per the report of the Internal Audit
Department, shall be recovered from the staff directly involved in fraud. Fines in form of pay
deduction or deference of promotions, transfer shall be imposed on all the employees who were
reporting to the culprit or were his immediate supervisors, who are proven to be delinquent in
performance of their duties. The HR Department may recommend the transfer of staff or their
termination from the employment of the company, depending upon the facts and circumstances of
the case. Before taking the aforesaid action, the HR Department shall take the approval of the
Managing Director. The power to recommend for termination of any employee on the basis of an
enquiry/investigation of the Internal Audit Department, shall solely vest withthe HR Department.
CONFIDENTIALITY
The Head (Internal Audit) will treat all information received with full confidentiality. Any employee
who suspects dishonest or fraudulent activity will notify the Head (Internal Audit) immediately and
should not attempt to personally conduct investigations or interviews/interrogations related to any
suspected fraudulent act.
Investigation results will not be disclosed or discussed with anyone other than those who need to be
kept informed. This is important in order to avoid damaging the reputation of persons suspected but
subsequently found innocent of wrongful conduct and to protect the Company from potential civil
liability.
FRAUD PREVENTION
Through this policy the company shall strive to adopt a preventive approach for identifying,analysing and
managing the risk of Fraud. The company shall follow zero tolerance to Fraud, at all levels. The
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Involvement of staff in fraud penalties
Confidentially
Prevention of fraud
company shall take steps to prevent the occurrence of fraud by:
Performing background checks, and verifying documents pertaining to borrowers,
employees and others with whom Premium finlease finance has a business
relationship.
Circulating information regarding the modus operandi in frauds that have occurred,on a
quarterly basis, to all branches for their information and necessary action.
Adopting digital channels for disbursements and collections with the objective of
eliminating cash transactions with clients.
Conducting regular meetings with the staff members.
Conducting surprise visits at branches to check the records and documents.
Conducting exit interviews for all employees.
Conducting Training Programmes and Seminars on frauds for all employees on aregular
basis.
ADMINISTRATION
The Managing Director of the Company will oversee the administration, interpretation, and
application of this policy. Any revision of this policy shall be placed before the Board of Directors for
approval.
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Administration
