{"id":16956,"date":"2020-08-23T10:49:24","date_gmt":"2020-08-23T10:49:24","guid":{"rendered":"https:\/\/bengalnewstimes.com\/?p=16956"},"modified":"2020-08-23T10:49:24","modified_gmt":"2020-08-23T10:49:24","slug":"rbi-to-banks-avoid-frequent-ad-hoc-review-of-credit-facility-for-businesses","status":"publish","type":"post","link":"https:\/\/bengalnewstimes.com\/?p=16956","title":{"rendered":"RBI to banks: Avoid frequent ad hoc review of credit facility for businesses"},"content":{"rendered":"<p><\/p>\n<div>\n<div class=\"article-image\">\n<figure><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-2055342 size-full\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2.jpg\" alt=\"rbi news today\" width=\"660\" height=\"440\" srcset=\"\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-2055342 size-full\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2.jpg\" alt=\"rbi news today\" width=\"660\" height=\"440\" srcset=\"\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-2055342 size-full\" src=\"https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2.jpg\" alt=\"rbi news today\" width=\"660\" height=\"440\" srcset=\"https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2.jpg 660w, https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2-401x267.jpg 401w, https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2-440x293.jpg 440w, https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2-80x54.jpg 80w, https:\/\/images.financialexpress.com\/2020\/08\/rbi1-2-313x209.jpg 313w\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><\/noscript><\/noscript><span class=\"article-caption\">The <a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/tag\/rbi\/\" rel=\"noopener noreferrer\">RBI<\/a> said that an analysis of practices followed by the lenders has brought out certain supervisory concerns<\/span><\/figure>\n<\/div>\n<p>Concerned over frequent changes in loan facility to businesses, the Reserve Bank on Friday asked all the lenders, including urban cooperative banks and small finance banks, to avoid repeated ad hoc and short review of credit facilities without justifiable reasons. Industry sources said the RBI directive comes in the backdrop of complaints that banks are charging high differential interest rates and not giving adequate financial support to businesses in line with the announcements made by the government from time to time to help the crisis-ridden industry.<\/p>\n<p>\u201c\u2026timely and comprehensive review\/renewal of credit facilities should be an integral part of the board-approved loan policy and credit risk management framework, and banks should avoid frequent and repeated ad hoc\/short review\/renewal of credit facilities without justifiable reasons,\u201d the RBI said in a communication to commercial banks, urban cooperative banks, and small finance banks.<\/p>\n<p>The RBI said that an analysis of practices followed by the lenders has brought out certain supervisory concerns including frequent and repeated ad-hoc review of credit facilities instead of regular review.<\/p>\n<p>The central bank asked the banks to capture all the data relating to regular as well as ad-hoc review of credit facilities in their core banking management information systems and make it available for scrutiny as and when required by the auditors or the RBI.<\/p>\n<p>Further, it added, the processes governing review or renewal of credit facilities should be brought under the scope of audit control mechanism of banks with immediate effect.<\/p>\n<p>\u201cWe advise that all banks should follow above instructions in letter and spirit,\u201d the RBI added. As per a circular on risk management system in banks, scheduled commercial banks are required to put in place a board approved credit policy prescribing the periodicity and methodology of review and renewal of credit facilities.<\/p>\n<p>The policy should also prescribe differential time schedules for review and renewal of borrower limits so that lower-rated borrowers whose financials show signs of problems are subjected to renewal control more frequently.<\/p>\n<p>Banks are expected to have a detailed board-approved policy on methodology and periodicity for review and renewal of credit facilities within the overall regulatory guidelines, and adhere to the them strictly, the RBI added.<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/s-p-bse-sensex-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">BSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nifty-50-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">NSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/investing-abroad\/\" target=\"_blank\" rel=\"noopener noreferrer\">US Market<\/a> and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">Income Tax Calculator<\/a>, know market\u2019s <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-gainers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Gainers<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-losers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Losers<\/a> &amp; <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/equity-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Equity Funds<\/a>. 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