On December 28, 2019,In a bid to find out early recognition of financial crisis, India’s central bank, the Reserve Bank of India (RBI) has asked all primary urban cooperative banks (UCBs) to report all exposures (including all fund-based and non-fund-based exposure on the borrower) of Rs 5 crore and above to the Central Repository of Information on Large Credits (CRILC), maintained by RBI.
These will also include special mention accounts (SMA)- those assets/accounts that shows traits of bad asset quality in the first 90 days itself or before it being identified as NPA(Non-Performing assets).Key Points:
i.The Reserve Bank has constituted CRILC of commercial banks, all India financial institutions (AIFIs) and some non-banking financial companies (NBFC) to improve the monitoring system, timely identification of financial problems, etc.
ii.Earlier in December 2019, in a 5th bi-monthly monetary policy review, the RBI had announced the introduction of the CRILC report to primary (Urban) Cooperative Bank (UCB) with assets of Rs 500 crore and above. UCB will have to submit CRILC report on quarterly basis. It will start from 31 December 2019.
iii.RBI will take strict action as per the provisions of the Banking Regulation Act, 1949, if UCBs didn’t take utmost care about data accuracy and integrity while submitting the information /data on large credit.
iv.Background: RBI has been extremely cautious on the front of cooperative banks after it has prohibited Punjab and Maharashtra Co-operative Bank Limited (PMC) operations & also appointed Jai Bhagwan Bhoria as an administrator to find out the alleged financial irregularities.
About 73 % of its assets at Rs 6,500 crore of Rs 11,800 crore that was given to the HDIL (Housing Development and Infrastructure Ltd ) group that in turn resulted into NPA.
About CRILC :
RBI has constituted a Central Repository of Information on Large Credits (CRILC) to collect, store, and publish data on all borrowers’ credit exposures.
The idea behind the creation of the CRILC was for financial institutions to notify the status of their stressed borrowers and submit the information to a central database of the RBI.
In January 2016, RBI imposed a fine of Rs.1 crore on the State Bank of Travancore (SBT) for violating some guidelines regarding the CRILC.
A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
Established– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (BP Kanungo, N S Vishwanathan, and Mahesh Kumar Jain, 1 is yet to be appointed)