Banks must share credit info from January 1: RBI
Concerned over the surge in non-performing assets (NPAs) and restructured loans of banks, the Reserve Bank of India (RBI) has made it mandatory that any sanction of fresh loans or renewal of loans to new and existing borrowers should be done only after obtaining and sharing necessary information from other banks from January 1, 2013.
The RBI has asked to put in place an effective mechanism for information sharing by December-end.
"Banks should strictly adhere to the instructions regarding sharing of information relating to credit, derivatives and unhedged foreign currency exposures among themselves. A major reason for deterioration in the asset quality of banks is the lack of effective information sharing among banks regarding their credit, derivatives and unhedged foreign currency exposures," it said in a notification.
Several borrowers, including Deccan Chronicle, had borrowed huge funds from banks and eventually defaulted in the absence of a proper credit sharing system.
The RBI has also asked the banks to strengthen their information back-up about the borrowers enjoying credit facilities from multiple banks by obtaining declaration from the borrowers about the credit facilities already enjoyed by them from other banks.
"Banks were also advised to exchange information about the conduct of borrowers' accounts with other banks in the specified format at least at quarterly intervals," it said.
RBI Guv rules out introduction of Islamic banking
Reserve Bank Governor D Subbarao on Thursday ruled out introduction of Islamic banking in the country but said other methods for channelising funds based on the principles of Islamic law can be looked at.
"Islamic banking is not possible", he said, adding the central bank could look at other vehicles based on Islamic banking principles to channelise NRI funds.
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