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Banks weighing central database of fraud attempts

Banks are looking to set up a central of borrowers who have attempted fraud. The database may also have details about those clients who withheld information or manipulated their books in order to secure lending from different lenders.

A senior bank executive said such a database will be on lines of the Central Fraud Registry (CFR) set up by the Reserve Bank and will have participation from both public and private banks. “Some preliminary discussions have taken place, we are yet to finalise the structure,” he said.

Under existing norms, banks need not report cases of attempted frauds to RBI but they need to place the report on individual cases of attempted fraud involving an amount of ₹1 crore and above before the audit committee of their board.

CFR, a web-based and searchable database, is set up by the regulator based on the fraud monitoring returns, filed by the banks and the select financial institutions.

Banks have been advised by the RBI to put in place proper systems and procedures to ensure that the information available through the database is made use of as a part of the credit risk governance and fraud risk management.

Another executive aware of the developments said that both corporate and retail borrowers can be a part of this new database.

Experts feel that such a database will help genuine borrowers and banks in the long run. “It will discourage borrowers who would now know that seeking credit through unscrupulous means may stop their access from all banks and FIs,” said Hitesh Pandey, chief executive at Synemerge Solutions, an advisory firm.

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