New Delhi | Rising incidents of financial fraud in India have triggered fresh concerns among regulators and financial institutions. In this backdrop, non-banking financial companies (NBFCs) have made a significant demand—seeking direct access to the Central Fraud Registry (CFR) maintained by the Reserve Bank of India. According to industry sources, the proposal has been taken up with the Department of Financial Services and is currently under consideration.
However, experts indicate that granting such access may not be straightforward. Any move in this direction could require amendments to the existing legal framework, particularly the Reserve Bank of India Act, 1934. Without such changes, extending CFR access to NBFCs may not be legally feasible.
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What is the Central Fraud Registry
The Central Fraud Registry was established in 2016 as a centralized database to track banking frauds across the system. It includes records of fraud cases involving amounts above ₹1 lakh and is currently accessible only to banks under regulatory guidelines.
NBFCs argue that as they play an increasingly important role in lending and financial services, excluding them from such a critical database heightens systemic risk. This concern is particularly relevant in the context of the rapidly growing co-lending model between banks and NBFCs.
Rising fraud figures intensify concerns
Recent data underscores the urgency of this demand. In the first half of FY 2025–26 (April–September), banking fraud cases involved an amount of ₹21,515 crore, compared to ₹16,569 crore during the same period in the previous financial year. This sharp increase reflects a growing vulnerability within the financial ecosystem.
Importantly, these figures do not include frauds involving NBFCs. Industry stakeholders contend that access to the CFR would enable NBFCs to better identify suspicious borrowers, detect fraud patterns early, and mitigate risks proactively.
Risks in the co-lending ecosystem
The expansion of co-lending arrangements between banks and NBFCs has further amplified the need for shared fraud intelligence. Under this model, both entities jointly extend credit to borrowers and share associated risks.
However, without access to historical fraud data, NBFCs may be unable to accurately assess borrower credibility or detect red flags. This limitation could not only impact individual institutions but also pose broader risks to financial stability.
Legal hurdles and policy considerations
Providing NBFCs access to the CFR will require careful legal and regulatory changes. Amendments to the RBI Act would be necessary, along with clearly defined rules on data usage, privacy, and security.
Experts caution that while data sharing can strengthen fraud prevention, it must be accompanied by robust safeguards to prevent misuse. A balanced and well-structured policy framework will be essential to ensure both security and efficiency.
RBI’s parallel initiatives
Meanwhile, the Reserve Bank of India is also taking proactive steps to curb fraud. The central bank is working on a “Digital Payments Intelligence Platform,” which will leverage advanced technologies to detect fraud patterns in real time.
This platform is expected to enhance coordination among banks and financial institutions, enabling faster response to suspicious transactions and strengthening the overall fraud detection ecosystem.
Industry outlook
The NBFC sector views access to the CFR as a potential game changer. Industry players believe it would significantly improve their ability to manage risk and prevent fraud, especially in an increasingly interconnected financial landscape.
At the same time, some experts emphasize that customer data protection and privacy must remain top priorities while designing any such framework.
