Looking for more transparency in Joint Lenders’ Forum, says SS Mundra

Reserve Bank of India is looking at getting more analytics into Joint Lenders’ Forum for more transparency and disclosures on loans.

“We are looking to put more analytics into joint lending forum system… When CDR (Corporate Debt Restructuring) was there, transparency was there but now with JLF banks are saying we don’t owe an answer to you…(we are) looking to mandate disclosures of loans that go to the forum,” said SS Mundra, Deputy Governor, RBI, on the sidelines of a summit..

JLF is an early-stage recovery plan when lenders get together to decide on a corrective action when the principal or interest payment is delayed for 31 to 60 days. A loan turns a non-performing asset (NPA) when dues are unpaid for 90 days.

On the asset quality concerns in the infrastructure sector, Mundra said the policy-related issues are being resolved, and economic growth will bring in some breather both to the lenders and borrowers.

In addition, the commitment on the part of promoters…they should be able to bring in the equity, new partners, if needed. Lenders also, wherever needed, should be prepared to take a hair cut rather than postpone the problem, insist on a new management... So it will be a combination of all these things, he said.

On the concerns over state-owned Life Insurance Corporation of India’s (LIC) increased exposure to the country's banking sector through its stakes in both state and private lenders, the RBI Deputy Governor said it was not just about LIC but excess holding by any entity.

“I was alluding to any holding on a system level by any entity. It happened to be LIC in the question and I mentioned that the stake is more than 9 per cent. So, from the view point of interconnectedness and contagion, as a probability, it is something that affects financial stability. It’s not that it is affecting today or it is going to affect tomorrow, but these are the probabilities,” Mundra stated.

With regard to the announcement of the names of applicants who will get payment bank and small finance bank licences, Mundra said it could be announced by the end of December.