CIBIL to launch centralized database on frauds

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CIBIL to launch centralized database on frauds

Bank frauds are not only increasing in number but also getting larger in size. To keep a check on this growing concern, Credit Information Bureau of India, or CIBIL, is gearing up to launch the first-ever centralised database on frauds.

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By Maitri Porecha and Priyanka Ghosh, CNBC-TV18

Bank frauds are not only increasing in number but also getting larger in size. To keep a check on this growing concern, Credit Information Bureau of India, or CIBIL , is gearing up to launch the first-ever centralised database on frauds.

The amount of money lost by Indian banks due to fraud over the past years is more than Rs 1,000 crore, according to a RBI report in 2005-06. Latest figures though are not available. Banks are now coming together to fight this menace and over 10 banks, including SBI and ICICI Bank , have been shortlisted by Indian Banks Association for creating the first ever database on banking frauds. The pilot project has been initiated by CIBIL.

"The first phase of the pilot project is that CIBIL will tie up with 10 banks, which will share its data. CIBIL and the banks will then try to collate and study the collected fraud data. Thus, through a centralized system, the banks will also be provided a fraud alert and this will help banks make informed decisions," said Arun Thukral, MD, CIBIL.

Currently, banks share fraud details with the RBI only if the amount exceeds Rs1 lakh. But now, banks will have to share data with a central repository on all frauds irrespective of the amount of damage.  According to a report submitted by the fraud accounting research firm, India Forensic, frauds to the tune of Rs 690 crore is known to the banks but not reported to various authorities.

"The formulation of such a database is a very timely step by CIBIL and is in the right direction. It will prove to be helpful for the consumer as well as the entire banking system in uncovering or discovering fraud.  This database will be useful in order to make institutions and consumers to take precautions against fraudulent activities," said Lalit Bhasin, Lawyer, Consumer Court.

With hi-tech fraud like phishing and skimming on the rise, this move could perhaps be the first step forward for banks to safeguard themselves.