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Rajalakshmi Menon

MUMBAI, Feb. 22

UNITING for a common cause, the Chairmen of leading PSU banks have decided to meet at regular intervals to share information on defaulters.

This follows the finding by some banks that there are common defaulters — a single borrower who has defaulted on payments with several banks.

Officials said that due to the delay in getting the Credit Information Bureau of India (CIBIL) started, banks were trying alternative ways for gathering information on defaulting borrowers.

The credit information bureau, jointly promoted by HDFC and State Bank of India, envisaged an information-sharing arrangement among banks, credit card companies, financial institutions and housing finance companies. However, due to a delay in various amendments, the bureau has been unable to take off.

According to senior bank officials, the idea of an informal meeting among bank chiefs was to bring all banks together to discuss defaulting accounts and to take joint action wherever possible.

Heads of banks such as State Bank of India, Bank of Baroda, Bank of India, Union Bank of India, Central Bank of India and Dena Bank, had decided to meet informally and share information on defaulting borrowers with dues over Rs 1 crore, said an official with one of the banks.

The strategy was initiated jointly by Mr V. Leeladhar, Chairman, Union Bank of India, and Dr Dalbir Singh, Chairman, Indian Banks' Association. So far, the CMDs have held three meetings. Officials said that the meetings had already begun yielding results, with the banks deciding to take action against some common borrowers.

Where a borrower has accounts with more than three banks, the chairmen have decided to devise a common plan against the defaulting borrower. In some cases, the defaulting borrower will be called for a meeting where the chairmen of the banks concerned would be present.

Bank officials believe the biggest problem facing banks today is that defaulting borrowers are in a position to play one bank against the other. "Timely information on defaulting borrowers is crucial to reducing the rising incidence of non-performing assets," said one banker.

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