RBI to soon issue norms for Central Fraud Registry: Mundra

Says the proposed institution, which will enable quick sharing of information on entities found to be defrauding banks, will work under the supervision of RBI

Reserve Bank of India (RBI) has almost finalised the structure of the Central Fraud Registry and will soon come up with guidelines to enable quick sharing of information about unscrupulous borrowers and help banks fight bad loans.

“We have almost finalised the structure. We would be issuing guidelines soon,” RBI Deputy Governor S S Mundra told PTI.

The proposed institution, which will enable quick sharing of information on entities found to be defrauding banks, would work under the supervision of RBI, he said.

Currently, banks are advertising the list of wilful defaulters on their website and newspapers individually. With setting up of this registry, list of all unscrupulous borrowers will be available on a single platform.

Thus, banks can take advantage of the registry at the time of sanctioning loan by checking the credentials of a borrower from the registry.

“It is important for the system to weed out the unethical elements at the earliest opportunity to ensure the credibility and the efficiency of the credit system in the country,” he said.

"Efforts also need to be made to alienate the wilful defaulters and fraudsters and debar them from accessing the banking system for further finance," he added.

As per RBI data, the gross NPAs (non-performing assets) of the PSU banks stood at Rs 2,60,531 crore, as on December 2014.

The top 30 defaulters are sitting on bad loans of Rs 95,122 crore, which is more than one-third of the entire non-performing assets (NPAs) of public sector banks as on December 2014.

The total number of borrowers having defaulted on Rs 10 crore and above at the end of September 2014, stood at 2,897 with outstanding amount of Rs 1.60 lakh crore.

RBI has issued instructions including designing framework for revitalising distress assets to improve the health of the financial sector, to reduce the NPAs, improve asset quality of the banks and to prevent slippages.

As per the framework, each bank has a Board approved loans recovery policy and it requires a robust mechanism for early detection of signs of distress including prompt restructuring in the case of all viable accounts.

It has been stipulated to review NPA accounts of Rs 1 crore and above by Board and top 300 NPA accounts by the management of the Board.