Banks setting up info sharing mechanism to check NPAs

The Reserve Bank of India (RBI) has directed banks to put in place an effective information sharing mechanism by end-December 2012, to address the issue of rising non-productive assets (NPAs) and restructured advances of banks.

This will help banks to use information on credit, derivatives and unhedged foreign currency exposures of prospective borrowers.

Effective 1 January 2013, any sanction of fresh loans / ad-hoc loans/renewal of loans to new or existing borrowers should be made only after obtaining/sharing necessary information, as per the RBI directive.

RBI will view non-adherence to these instructions seriously and banks would be liable for action, including imposition of penalty wherever considered appropriate, an official release said today.

The regulatory and supervisory measures are aimed at reducing growth in NPAs and restructured advances by banks and are being closely monitored by the RBI on an ongoing basis, minister of state for finance Namo Narain Meena informed the Rajya Sabha in a written reply today.

Total non-performing assets of scheduled commercial banks in the country rose to Rs62,602.57 crore at the end of September in the 2011-12 financial year from Rs56,332.30 crore during the similar period of the previous fiscal (2010-11).