RBI directs banks to share information to check rising NPAs

MUMBAI: The Reserve Bank of India on Wednesday directed banks to share information on credit exposure among themselves. Banks failing to adhere to this directive would be viewed seriously by the RBI and banks would be liable to action, including imposition of penalty, said the central bank in a notification.. This announcement comes at a time when the banking sector is seeing a surge in corporate debt restructuring and rising bad loans.

A major reason for deterioration in the asset quality of banks is the lack of effective information sharing among them, despite specific instructions issued in September and December 2008 regarding sharing of information on credit, derivatives and unhedged foreign currency exposure,'' said the RBI.

Banks should strictly adhere to the instructions regarding sharing of information relating to credit, derivatives and unhedged foreign currency exposures among themselves and put in place an effective mechanism for information sharing by end-December 2012,''it said.

Banks would now be able to sanction of fresh loans, ad hoc loans, renewal of loans to new, existing borrowers from January 2013, only after sharing necessary information. Non-adherence to these instructions would be viewed seriously by the Reserve Bank and banks would be liable to action, including imposition of penalty, wherever considered appropriate,'' said RBI.