Banks join hands to recover dues from large borrowers

‘United we stand, divided we fall’ seems to be the motto of banks when it comes to effecting recovery of bad loans. Banks are joining forces in initiating recovery action against large borrowers who have taken loans under multiple banking arrangements, according to Punjab National Bank Chairman and Managing Director K. R. Kamath. Hitherto, banks joined hands for enforcing security interest (that is, taking possession of the pledged collateral and selling it off) only in the case of consortium lending.

A multiple banking arrangement entails a borrower approaching two or more banks individually to finance the same project. In the case of consortium lending, the borrower approaches a syndicate of banks with a common application to fund a project. Kamath, who is also the Chairman of the Indian Banks’ Association (IBA), said even private sector banks have shown interest in jointly making efforts to recover loans from defaulting borrowers.

Read more >> Click here