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In a bid to control the growing stressed assets in the banking segment, the Reserve Bank of India is considering a proposal that would limit the number of participants in a single consortium of lenders. The move is aimed at pushing banks to carry out better credit checks and effectively deal with defaulters.
While addressing a conference on Tuesday, Reserve Bank of India Deputy Governor R Gandhi said, “The suggestion is to have a regulatory limit on the number of members in a consortium, so that every member will have a serious independent credit appraisal and credit mindset.”
He, however, added that the move could restrict a bank’s freedom. To thrash out the pros and cons of the proposal, the RBI is discussing it with various stakeholders. Gandhi added that there was an urgent need for banks to reduce their stressed assets to improve liquidity in the sector.
Stressed assets The stressed assets ratio (gross non-performing assets plus restructured standard advances to gross advances) for the system as a whole rose to 10.9 per cent at the end of March 2015 compared with 10 per cent in March last year. This means that nearly ₹7.05-lakh crore worth of bank loans now fall in the stressed category compared with ₹5.91-lakh crore last year.
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