New Delhi: The Reserve Bank of India is concerned about the frequent changes in loan facilities to companies. The central bank on Friday asked all banks, including urban co-
operative banks and small finance banks, to refrain from informally short review of credit facility repeatedly without any justified reason. Industry sources say that the Reserve Bank has given this directive after complaints that banks are charging higher interest from companies and are not providing adequate financial support to the government in distress as per the government’s announcement of help.
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In a directive issued to commercial banks, urban co-operative banks and small finance banks, the Reserve Bank has said that the lending facilities should be reviewed in a time bound manner under the loan policy approved by the board. But banks should avoid repeated informal reviews in the short term.
The central bank said that an analysis of the behavior being followed by banks shows that they are doing ad hoc reviews repeatedly rather than regular review of credit facility. The Reserve Bank has directed banks to keep informal and regular review of credit facilities in their main banking management information system and make them available whenever demanded by the auditor or central bank.
