New framework to combatnfrauds: A good follow-up

By Sawant Singh and Aditya Bhargava, Phoenix Legal
0
1650
LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link

One of the villains in the Indian growth story is the poor state of capitalization of India’s public sector banks (PSBs). Most government majority-owned PSBs are among India’s largest banks and also have the largest exposure to stressed assets and sectors. Continued exposure to delinquent borrowers and fraudulent practices by borrowers of the PSBs has contributed to the declining credit quality of the loans made by the PSBs.

Sawant Singh
Sawant Singh

To improve the PSBs’ situation, the Reserve Bank of India (RBI) has taken steps such as introducing higher provisioning for restructured assets and guidelines for formation of a joint lenders forum to “work out” potentially stressed borrowers before they become non-performing assets. The RBI has also introduced changes to the prescriptions on wilful defaulters to make it more difficult for delinquent borrowers to access the credit markets. These measures apply not only to PSBs but to the banking sector in general (including Indian branches of foreign banks).

Following up on these measures, the RBI issued a circular on 7 May prescribing a framework to identify and deal with fraudulent accounts, and to develop appropriate risk control measures for such accounts. The framework, based on the recommendations of an RBI internal working group, seeks to direct the attention of banks to early detection and prevention of fraud, and prompt reporting to the RBI and any investigating agencies of any instance of fraud, without overly affecting the “normal conduct of business” and “risk taking ability” of banks.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

For group subscribers, please click here to access.
Interested in group subscription? Please contact us.

你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章,欢迎成为我们的订阅会员成为我们的订阅会员

已有集团订阅,可点击此处继续浏览。
如对集团订阅感兴趣,请联络我们

Sawant Singh is a partner and Aditya Bhargava is a principal associate at the Mumbai office of Phoenix Legal.

logoNew Delhi

Second Floor,

254, Okhla Industrial Estate

Phase III

New Delhi – 110 020, India

Tel +91 11 4983 0000

Fax: +91 11 4983 0099

Email: delhi@phoenixlegal.in

Mumbai

Vaswani Mansion, 3rd Floor

120 Dinshaw Vachha Road

Churchgate

Mumbai – 400 020, India

Tel: +91 22 4340 8500

Fax: +91 22 4340 8501

Email: mumbai@phoenixlegal.in

 

LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link