CIBIL-like database for brokers gathers steam

The facility is called the ANMI Bureau of Client Disputes

The Association of National Exchange Members of India (ANMI) has decided to give a fresh push to its client database designed to function like a ‘CIBIL for brokers’.

Unlike the Credit Information Bureau (India) Ltd (CIBIL) or its peers Experian, Equifax and High Mark, which provide information on a person’s credit history, the broker database will flag clients involved in disputes with stockbrokers.

The brokers’ association has been in touch with the top 10 players as well as backoffice service providers on the issue, according to senior officials with ANMI, which claims a membership of 900 brokers. The database received a fresh impetus after a large domestic broker faced an issue with defaulting clients recently, sources said. The broker lost a seven figure sum, they added.

ANMI officials claim that in many instances, clients fail to pay up on disputed amounts even after arbitration goes in the favour of brokers. Instead, they move court over the issue and transfer their assets to someone else to avoid shelling out. These clients also continue to trade by opening an account with another broker, who has no way of knowing the client’s history.

The ANMI Bureau of Client Disputes database is to provide brokers with a reference for checking the past history of potential clients, and identify those who have had disputes with other brokers, said ANMI officials. The facility had been launched a couple of years ago but had only 30-40 entries. This has moved into triple figures after recent efforts to reach out to brokers on the issue. The database will allow brokers to take an informed decision on whether to take such people on as clients, said Hozefa S K, director, ANMI. “We hope to reach a thousand entries in two-three months.”

The association has also received feedback on the need for an upload facility, which will allow the details of multiple clients to be entered at a single stroke rather than individually as is the case now. A similar proposal to allow for downloading such a database, which would allow it to be checked against a broker’s existing client list is also being considered, they said.  Brokers will be able to search for clients by their permanent account number (PAN).

According to Hozefa, the numbers are expected to pick up, especially with the participation of large brokers once these measures are in place.