The Hindu Business Line : OBC draws up policy for collateral

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Chennai March 2 Oriental Bank of Commerce has drawn up a fresh policy for demanding collateral security while sanctioning a loan, and is to take the policy to its board of directors for approval, the bank's Chairman and Managing Director, Mr K.N. Prithviraj, told journalists here on Friday.

"It will be a system of graded collateral," he said, explaining that the bank would, henceforth, give due importance to the cash flows of the borrower, rather than only look at the borrower's past performance.

Mr Prithviraj, who was here to inaugurate a branch in the city, said that one of the bank's clients had huge orders and needed working capital to execute them. However, the bank's norms for lending did not permit raising the borrower's limit. Giving this as an example, he said that the bank would be flexible in such cases. "The time has come for bankers to get to know customers' customers," he said.

Banks should be prepared to fund on the basis of the needs of customers, he said. "We have risk managers, but we need risk takers," he said in a generic observation of the banking industry.

Mr Prithviraj said that it was about time that public sector banks were allowed variable pay scales, in order to attract talent into the banks as well as rewarding the better performers. Meanwhile, Oriental Bank plans to open another 20 branches this month. It got licence from the RBI for 70 branches, and has so far this year opened 39.

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