Consortium lenders to monitor corporate loan a/c individually
NEW DELHI: All public sector banks, which form part of a consortium that lends to companies, will have to monitor the performance of their individual loan accounts. In most cases, the monitoring is left to the lead lender. The move is expected to help banks take timely decisions on loan accounts regardless of the lead bank.
“Often everything is left to the lead bank — from monitoring of the loan account to what decisions need to be taken. What needs to be done is to ensure that all banks are equally accountable in monitoring loan accounts,” a senior government official who did not wish to be identified told HT.
While all banks have their own internal committees under the chairperson to monitor such loan accounts, in most cases these panels are not effective.
Lenders such as IDBI Bank are being examined by the CBI and the Enforcement Directorate (ED) for lending to Vijay Mallya’s now-defunct Kingfisher Airlines (KFA). Both agencies have noted that there have been gaps in monitoring KFA’s loan accounts.
Mallya owes around ` 7,000 crore to a consortium of 17 banks led by State Bank of India (SBI) in lieu of loans to KFA.
Banks have been criticised for being slow in seeking Mallya’s detention. Finance minister Arun Jaitley has said that banks should have acted earlier to stop Mallya from going abroad.
“In the case of Kingfisher, several banks that were in the consortium were of the opinion that all decisions would have to be taken by the lead bank (SBI)… that will not work,” the official said.
The finance ministry and the Reserve Bank of India (RBI) have also asked banks to put in place a system to ensure that such NPA problems do not recur.
Gross non-performing assets (NPAs)—loans that do not yield returns—of state-owned banks have gone up from 5.43% of total advances as on March 2015 to 7.30% as on December 2015.