..........Promising the regulator’s help, ‘with every means at central bank’s disposal’, the governor reminded bankers of their duty to help those with genuine difficulty, while being firm with those who are trying to milk the system. As regards the approach of regulators towards failure on part of the borrowers in repaying loans on due dates, there has been consistency all through. In 1989, the Agricultural Credit Review Committee (ACRC) had made the following observation on ‘overdues’......
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Machines started doing credit appraisal and the format and formulae are well laid out. The Entrepreneur, enterprise and environment and the risk analysis associated with all the three after due diligence is not well crafted. The fund flow and cash flow projections are guestimates of a Chartered Accountant and in some banks even the appraisal format is part of the comprehensive application. The appraisal formats are also filled up by the Chartered Accountant! The group approach to sanction and video conferences with the client have become ritualistic and the Committee being hierarchical the chairman of the committee would always prevail over the rest. If the NPAs are to be arrested, the whole appraisal process has to be looked at afresh and the CDR rejigged. The facilitation under CDR is more abused than used and therefore needs better oversight. The SMA concept is no answer as it has not provided any correction since its introduction in 2002. Micro management by the RBI is no solution. On the other hand, the banks must be enjoined upon to restructure their credit risk management practices.
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