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RBI issues guidelines to Banks to exchange of information

The RBI took note of growing non-performing assets and restructured loans that are causing deterioration in the assets quality and thereby affecting Banking system. RBI issued guidelines to all banks in second quarter review monetary policy 2012-2013 and advised the banks:

To obtain declaration from borrowers in respect of any credit facilities already availed by them from any other bank or banks prior from this present loan.
And as further advised to exchange information with respect to borrowers accounts and conduct of these and any other information in relation to credit, derivative among themselves
To put up effective mechanism in the banks for exchange of this information.
Sanction of fresh loans or existing borrowers or renewal of old loans are required to be granted only after obtaining/sharing of information as prescribed with effect from January 1, 2013.
The banks are mandatory required to comply with the prescribed conditions and in case of non-adherence to same may be viewed seriouslyby RBI and would be liable to action including imposition of penalty whenever considered appropriate.

These directions come in wake of increasing defaulters and creation of large non-performing assets causing instability in the fiscal system. These directions shall help banks in scanning the applications of loans and sanctions loans only to those who shall repay and help also maintaining liquidity in the economy.

This shall also help in reducing the amount cases pertaining to default of loans and reduce burden of Debt recovery tribunal which is already witnessing a sea of cases

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