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Central agency must be set up to evaluate big loan proposals: ICAI

PTI New Delhi | Updated on July 08, 2018

The Institute of Chartered Accountants of India has suggested constituting a central agency, with cost accountants and experts from other fields, to evaluate the applications for large loans before banks give their approval.

The suggestion comes at a time when the country’s banking system is grappling with mounting sour loans and authorities are working on a multi-pronged strategy to deal with the NPA menace.

For appraisal of big loan proposals that the banks get, the Finance Ministry should look at constituting a central agency, ICAI President Sanjay Gupta told PTI.

The agency will carry out a cost evaluation of the loan proposals as well as audit the efficiency of the projects concerned, he added.

Non-performing assets (NPAs) in the banking sector had crossed Rs 9 lakh crore at the end of December 2017 and the Reserve Bank of India has warned of further worsening of the situation.

According to Gupta, big banks have better means for research and development and they can better evaluate the loan proposals. However, there are several small banks that do not have proper means to appraise them, he said, adding that in such cases, a central agency to look at the loan proposals will play a better role.

Published on July 08, 2018

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