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‘No penalty for not taking decision, but sword for taking one’: why files don’t move in banks

Bankers say they don’t want to take decisions on loan restructuring or big-ticket lending because they fear investigative agencies might go after them even after their retirement. Little wonder that funding for many projects is getting stuck and revival of projects or companies is sinking.
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Joel
18 Jul 2019 5 Mins Read 7 comments
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In a meeting of bankers earlier this year, hectic parleys took place on restructuring loans to a power-sector project. The discussions centered around bringing in a new investor who was ready to pump more money into the project. A majority of the bank consortium had agreed to give the investor a go-ahead. However, officials from two banks refused to budge.
June provide for a template for loan restructuring, making signing of inter-creditor agreements (ICA) between banks compulsory. Once banks sign an ICA, they are bound to agree to the collective decision for restructuring. Large banks hope the new guidelines will ensure that the house is put back in order. Till then, bankers won’t risk sticking their neck out.
In a meeting of bankers earlier this year, hectic parleys took place on restructuring loans to a power-sector project. The discussions centered around bringing in a new investor who was ready to pump more money into the project. A majority of the bank consortium had agreed to give the investor a go-ahead. However, officials from two banks refused to budge. June provide for a template for loan restructuring, making signing of inter-creditor agreements (ICA) between banks compulsory. Once banks sign an ICA, they are bound to agree to the collective decision for restructuring. Large banks hope the new guidelines will ensure that the house is put back in order. Till then, bankers won’t risk sticking their neck out.

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CONTRIBUTORS WHO HAVE COMMENTED ON THIS STORY

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user Mohan Sushantam Citigroup, Vice President

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user Azeez Hussain Canara Bank, SME Marketing Officer

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user Jignesh Yagnik Enn Enn Fincap India P Ltd, CFO

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