“The aim is to increase the efficiency in exchange of information in the consortium arrangement,” said a senior bank executive aware of the developments, adding that the proposed structure will provide for loan identity number, monitoring mechanism, stock statement maintenance and DP allocation. “This will ensure receiving and storage of common information and providing access to information on a need-to-know basis,” he added.
Another executive aware of the deliberations said the discussions are preliminary and the Indian Banks’ Association (IBA) will take a final call. “We will be exploring the synergies between loan registry and the information utility or IU function,” he added.
Banks are already working out the contours of syndicate loan arrangements for loan value of ₹2,000 crore and above, which will include single-point inspection of syndicated loan accounts and norms for a more structured approach by lenders to take care of the entire life cycle of the loan.
The aim is to address the shortcomings in the existing arrangements for credit delivery and to improve efficiency, uniformity, information dissemination and facilitate single point inspection by regulators.
IBA in a report has also recommended strengthening the current ecosystem for the syndicated loan system and align it with existing international models being practised in more developed financial markets.
“We will be working on creation of infrastructure like information portal, drafting of common documents and identification of service providers,” said the second executive quoted above, adding they are also working with NESL on issuance of electronic bank guarantee.
The new framework may also have specifics on minimum retention requirement, centralised supervisory oversight and audit, and development of secondary market for corporate loans.