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Business News/ Industry / Banking/  Lenders have empanelled 83 agencies to monitor end-use of loans, says SBI chief
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Lenders have empanelled 83 agencies to monitor end-use of loans, says SBI chief

Hiring oversight agencies is one of the things being done. Even the methods of lending will have to undergo change: SBI chairman
  • There have been instances where one borrows from one bank, while holding a current account in another bank, which is used to divert funds
  • SBI chairman Rajnish Kumar (Mint file)Premium
    SBI chairman Rajnish Kumar (Mint file)

    MUMBAI : Diversion of funds is a big concern for banks and 83 oversight agencies have been empanelled to continuously monitor end-use of bank loans, said Rajnish Kumar, chairman, State Bank of India (SBI).

    “So, hiring oversight agencies is one of the things being done. Even the methods of lending will have to undergo change. The consortium discipline or the multiple banking discipline has to be improved and, there, the regulator also has to play a role," said Kumar.

    He added that there have been instances, wherein an individual borrows from one bank, while having a current account in another bank that is used to divert funds.

    Kumar was speaking at the launch of Sahamati, an umbrella organization for account aggregators, a new class of non-banking financial companies (NBFCs).

    The aggregators would act as intermediaries between financial information users and financial information providers after getting a digital consent from the consumer. The Reserve Bank of India (RBI) has already granted in-principle approval to seven such aggregators.

    Speaking on problems of non-banks, Kumar said entity-level difficulties and resolutions will have to be dealt with.

    At the sectoral level, he said there was enough liquidity in the system, as the Reserve Bank announced measures immediately after the budget to improve liquidity for the NBFC sector.

    “So, at entity level, if there is an issue, it cannot be resolved by any measure at the macro level," he said.

    On credit growth, Kumar said the second half of every financial year is busy, and the first half is always the easy season.

    “If you look at year-on-year growth, we are seeing growth of 13%. Hopefully, if this trend continues and it remains 13% in the second half, we will be very happy. We will know only in the second half of how much credit is coming," said Kumar.

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    ABOUT THE AUTHOR
    Shayan Ghosh
    Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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    Updated: 25 Jul 2019, 11:30 PM IST
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