NBFCs seek access to fraud registry, but may need amendment to RBI Act

Non-banking financial companies seek access to RBI's central fraud registry, arguing that limited access raises fraud risks as lending partnerships with banks deepen

In a significant move, non-banking financial companies (NBFCs) are said to have sought access to Mint Road’s central fraud registry (CFR), an industry source told Business Standard, adding that the matter has been taken up with the Department of Financial Services.

 

However, this is easier said than done, since any such move will need an amendment to the Reserve Bank of India (RBI) Act, 1934.

 

The CFR, which was established in 2016, is a database of bank frauds that involve a sum of more Rs 100,000. Under current rules, however, only banks can access the registry.

 

According to the Report on Trend and Progress of Banking in India (2024-25), alleged fraud cases between April and September FY26 involved a sum of Rs 21,515 crore, compared to Rs 16,569 crore in the corresponding period in the previous fiscal. Significantly, this amount does not include frauds perpetrated on NBFCs.

 

NBFCs argue that fraud data should be made available to them as well, since they often have overlapping customers with commercial banks, and restricting access to suspect customer lists leaves them in the dark about trustworthiness of such borrowers. Banks now increasingly partner with NBFCs to onboard new customers, cross-sell products and services, as well as co-lend.

 

“If banks are only to have access to the CFR, it increases the scope for frauds. Such access should be linked to the business and not to the nature of the entity which as of now is only banks”, said an NBFC official.

 

The demand for access to the CFR may now renew a similar demand for the Central Repository of Information on Large Credits (CRILC). Set up in FY15, CRILC is a database for offsite supervision of banks, and captures the credit information of large borrowers defined as those having aggregate fund-based and non-fund-based exposure of Rs 5 crore and above.

 

What is interesting is that while NBFCs are mandated to report relevant credit information on a quarterly basis to CRILC, they can't access the data on their own customers or prospective customers (through CRILC). In the past, mutual funds have also demanded access to CRILC data.

 

The demand over NBFCs access to CFR must be read with Master Directions on Fraud Risk Management in NBFCs, including housing finance companies for FY25; and the draft amendment directions for ‘Advertising, Marketing and Sales of Financial Products and Services’ of March 2026.

 

The Master Directions superseded the previous guidelines from 2016, and are aimed at enhancing fraud prevention, early detection, and timely reporting mechanisms within NBFCs. The directions mandate a robust governance structure, including the establishment of Board-approved policies for fraud risk management and the constitution of special committees for monitoring fraud cases. The draft amendment directions for ‘Advertising, Marketing and Sales of Financial Products and Services’ defined mis-selling for the first time. It is also for a 'Code of Conduct’ for the marketing and sales force of lenders. The runaway growth in retail credit, and incentives offered by lenders to employees to meet targets may well be under the scanner going ahead.

 

The RBI is also enhancing security, customer protection, and fraud prevention, besides planning a Digital Payments Intelligence Platform which will leverage advanced technologies to curb payment related frauds.

 

The pain points

• NBFCs lack of access to the fraud registry increases potential for fraud
• NBFCs now partner with banks to for multiple services and products
• Total amount involved in frauds at Rs 21,515 crore between April and September FY26