Banks consider central database on fraud attempts, may include clients’ details who fudged a/c for loans

New Delhi: Several banks are actively considering setting up a central database of borrowers who have committed fraud and will have names and details of the fraudster, their companies, who suppressed information or fudged accounts in a bid to obtain loans from different lenders.

Citing a senior bank executive, ET reported that such a database will be along the lines of the Central Fraud Registry (CFR) constituted by the Reserve Bank of India and will have involvement from both public and private sector lenders.

“Some preliminary discussions have taken place, we are yet to finalise the structure,” the financial daily quoted the official as saying.

As per the existing rules, banks need not report cases of attempted frauds of Rs 1 crore and above to RBI. However, banks should continue to place the report on individual cases of attempted fraud involving an amount of Rs 1 crore and above before the audit committee of its board.

CRF, a web-based searchable database of frauds reported by banks and select financial institutions, is set up by the banking regulator. However, it had remained a non-starter until now, with the apex bank reluctant to make the names of fraudsters and bank loan defaulters public.

The apex bank has asked the lenders to put in place a foolproof system and procedures to ensure that the information available via the database is made use of to strengthen the credit risk governance and fraud risk management systems.

Another executive familiar with the matter said that both corporate and retail borrowers can be a part of this new database.

Experts are of the view that such a database will help real borrowers and lenders in the long run. Hitesh Pandey, chief executive at Synemerge Solutions, an advisory firm, told the daily it will deter borrowers who would now aware that seeking credit through corrupt ways may cease their access to all banks and financial institutions.