He also said NPAs rose because bankers don’t approach a borrower with the mind of a CBI/ED sleuth, but with trust.
Apportioning the blame for bad loans, which has almost touched 12 per cent of the system, on the government, the judiciary, banks and slimy borrowers, he said, “instead of lessening credit risk, consortium lending has mostly increased the pain as inordinate delay in loan appraisal, has most of the time, killed projects.”
Listing out problems around the consortium lending or multiple banking systems, he said, “up to the mid-90s, it used to be consortium banking and later on, because there were complaints saying it was delaying the process, we went into multiple banking, but that has not resulted in faster decision-making. Instead, it has led to more NPAs.”
As a way out, he suggested limiting the size of the consortium as it does not make sense to have too many banks for small loans.
“SBI will definitely reorganise many consortia. Up to Rs 500 crore, I don’t do consortium lending anyway. I can take over some loans or I can exit from other consortia,” Kumar, the chairman of the largest lender, told reporters on the sidelines of the national banking summit organised by the industry lobbies Ficci and IBA here today.
He further said the finance ministry wants the loan appraisal to be quicker so credit flow to the industry can be faster, and lending out of a consortium can achieve this.
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