What changed
RBI issued a specific alert on September 27, 2011, detailing a modus operandi where fake bank guarantees were presented for confirmation. The BGs had forged signatures, mismatched serial numbers, and were not issued by the purported bank branches. The circular lists the names of beneficiaries, representatives, and applicants involved.
What it means for you
NBFCs must tighten verification of bank guarantees, especially those from unknown parties or with suspicious formats. This fraud highlights the need for cross-checking with issuing banks and validating signatures. Failure to detect such fakes could lead to financial losses and regulatory scrutiny.
What you must do
- Verify all bank guarantees directly with the issuing bank before confirmation.
- Cross-check BG formats and serial numbers against known bank standards.
- Flag any transactions involving the listed entities: M/s SFT Exports, Sumsh Infrastructure Pvt Ltd, M/s Tulip and Co, Alka Hotel Pvt Ltd, and their representatives.
- Train staff on detecting forged signatures and fake documentation.
- Report any suspicious BG presentations to RBI immediately.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs)
What specific fraud does this circular address?
It addresses a scheme where fake bank guarantees, with forged signatures and incorrect serial numbers, were presented for confirmation by individuals and firms not known to the issuing bank.
Which entities are named in the fraud?
Beneficiaries include M/s SFT Exports, Sumsh Infrastructure Pvt Ltd, M/s Tulip and Co, and Alka Hotel Pvt Ltd. Representatives and applicants are also listed in the circular.
What should NBFCs do if they encounter a suspicious BG?
NBFCs should verify the BG with the issuing bank, check format and serial numbers, and report any discrepancies to RBI. They must also avoid dealing with the named entities.