Banks can now access info on suspect activities

Banks can now access and share information on high-risk activities, thanks to CIBIL Detect – a nationwide database of reported fraudulent and suspect activities.

This database will serve as due diligence tool for banks before establishing business relationship with new customers, Mr Arun Thukral, Managing Director of CIBIL, the country's first credit information bureau, said at the launch of CIBIL Detect here on Tuesday.

CIBIL Detect is the first centralised repository in India on confirmed frauds, cases of misuse or attempted misuse of data and suspected or high risk cases that are under investigation in banks and financial institutions.

The solution is actively addressing an industry concern at a time when lending institutions are facing increases in write-offs and bad debt, many of which can be attributed to fraudulent activities. CIBIL Direct also contains information on high risk vendors and agents which institutions (credit grantors) can share and access.

Asked about the pricing of CIBIL Detect, Mr Thukral said that it has been decided to adopt a subscription pricing model for this product. Banks will be required to pay a flat annual fee for making enquiries about fraudulent or suspected activities. Simply put, the unit cost for every bank would depend on the number of enquiries made during a year.

Mr Thukral said that the pricing model for CIBIL Detect was different from the one in existence for credit information reports (CIRs). CIBIL charges a specific fee for every CIR furnished by the credit information bureau. CIRs are a vital tool used by credit grantors when acquiring a new customer and provide factual information on credit histories of borrowers enabling institutions to make objective lending decisions. “CIBIL Detect and CIRs are different products and we have adopted different pricing models,” Mr Thukral told Business Line.

Asked whether CIBIL will share information from the CIBIL Detect database with investigation changes and financial intelligence unit, Mr Thukral replied in the negative. He said that no specific provision existed for this purpose in the law governing credit information bureaus.

There has been increasing number of frauds in banks in recent years and this has been a matter of concern for the policy makers. In 2009, Indian banks reported fraud losses totalling Rs 1,880 crore. CIBIL Detect is an Indian Banks Association-backed initiative.

http://www.thehindubusinessline.com/2010/07/08/stories/2010070851800600.htm