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RBI sets up Central Fraud Registry

The Reserve Bank of India has put in place a central fraud registry, which is a searchable database to help banks detect instances of fraud by borrowers early on, the central bank said in a notification on Thursday.

Given that borrowers indulging in fraud typically take advantage of the lack of information with banks, RBI had proposed setting up such a registry at its bimonthly monetary policy review on 30 September 2014.

Frauds of Rs.100,000 and above but below Rs.5 crore will be monitored by the respective regional office of the RBI under whose jurisdiction the head office of the reporting bank falls, RBI said in its notification.

Frauds of Rs.5 crore and above will be monitored by the Central Fraud Monitoring Cell (CFMC) of the central bank.

RBI has asked banks to provide flash reports in fraud cases of Rs.5 crore and above to the Department of Banking Supervision along with the CFMC. Earlier cases involving a sum of Rs.1 crore and above had required flash reports to be given to RBI.

Besides the fraud registry, the central bank has also issued guidelines for banks to detect frauds related to loan accounts. Given the incessant rise in bad loans that banks are facing since the last two years, and with several of these arising out of fraudulent behaviour, the central bank has been urging banks to detect such cases at an early stage to avoid a big hit later on their books.

In May 2014, RBI had mandated banks to begin a process of red-flagging accounts that showed signs of fraud. The central bank had given an exhaustive list of trigger points that can be construed as signs of fraud.

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