Money & Banking

Specialised monitoring agencies have opened up new avenues for CAs: Corp Bank MD

Our Bureau Mangaluru | Updated on December 12, 2019

The appointment of specialised monitoring agencies by banks for post-sanction credit monitoring has created vast opportunities for chartered accountants (CAs) in the banking industry, according to P.V. Bharathi, Managing Director and Chief Executive Officer, Corporation Bank.

Inaugurating the national conference of the Institute of Chartered Accountants of India (ICAI) in Mangaluru on Thursday, she said post-sanction credit monitoring starts from the moment credit is sanctioned to the borrower, and ends only when the account is closed.

Post-sanction credit monitoring is vital to maintain a healthy credit portfolio. Lack of post-sanction credit monitoring could turn an otherwise good credit selection, into an unviable proposition.

Post-sanction credit monitoring depends upon factors such as the type of credit facilities, nature of activity, purpose of loan, geography, market dynamics and regulatory requirements, and it has to be fine-tuned on a case-to-case basis.

To make the credit monitoring process more robust, the Government has advised the banks to take the services of audit firms as specialised monitoring agencies for clean and effective post-sanction follow-up on a common engagement basis, in the case of consortium lending.

This agency for specialised monitoring has professionals with domain knowledge, experience and skills in different sectors and industries. In case of large exposure or exposure of a specialised nature, such agencies provide inspection services, stock audit, cash flow monitoring, and end-use, among others.

She said banks have now started appointing external agencies to monitor loan accounts of ₹250 crore and above, and more than 80 agencies have been appointed. These agencies would monitor all the transactions of an account on a day-to-day basis at the back-end.

Bharathi said this has created vast opportunities for CAs, as the work stretches throughout the year, and call for specialisation not only of the financial system, but actual business operations and functioning of the industry and business concerned.

She said the exposure of banks to borrowers ranges from plain vanilla trading to complex project execution. “Each exposure is unique in terms of the nature of exposure, purpose of credit, nature of borrower, the prevailing market scenario, geographic location, industry characteristics, etc, and entails different skill-sets and parameters for monitoring. In view of this, the scope of work for a special monitoring agency is very broad,” she added.

M. Venkatesh, Managing Director of Mangalore Refinery and Petrochemicals Ltd, released an e-souvenir of the conference on the occasion.

Published on December 12, 2019

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