Reserve Bank to create central repository on large credits

The Reserve Bank has decided to create a central repository on large borrowers — both individuals and entities — with exposure of more than Rs 10 crore to help banks deal with credit risks.

The RBI, in a notification, said it is necessary to build a repository of large credits and share with the banks for enabling them to be aware of building leverage and common exposures.

“Accordingly, it has been decided to use the information supplied by the banks through the Return on Large Borrowers (Form A)...which captures the system-wide exposure of individuals and entities having exposure (both fund and non-fund based) of more than Rs 10 crore, for creation of a central repository of large credits across banks,” it said.

Raghuram Rajan, on taking over charge as RBI Governor, had said the central bank proposes to collect credit data and examine large common exposures across banks.

“This will enable the creation of a central repository on large credits, which we will share with the banks. This will enable banks themselves to be aware of building leverage and common exposures,” he had said.

RBI collects the data from banks and non-submission of or wrong reporting attracts penalties.

“Banks are advised to take utmost care of data accuracy and integrity while submitting data on large credit to the RBI, failing which penal action...would be undertaken,” the apex bank said.

The gross non-performing assets (NPA) of public sector banks rose to Rs 1.76 lakh crore at the end of the June quarter from Rs 1.55 lakh crore on March 31, 2013.

The ratio of gross NPAs to gross advances for commercial banks rose from 2.36 per cent in March 2011 to 3.92 per cent in June 2013.

Source: thehindubusinessline