RBI mulling cap on no of banks in lenders consortium

The suggestion is to have a regulatory limit on the number of members in a consortium or multiple banking arrangements so that every member has at least 10% of the exposure and will have serious independent credit appraisal and credit monitoring, R Gandhi said.

The Reserve Bank of India (RBI) is considering a proposal whereby it could limit the number of banks in a single lenders’ consortium to check the rise in non-performing assets (NPAs).

RBI deputy governor R Gandhi said on Tuesday that the suggestion is to have a regulatory limit on the number of members in a consortium or multiple banking arrangements so that every member has at least 10% of the exposure and will have serious independent credit appraisal and credit monitoring.

“A suggestion that has come relates to limiting the number of banks and financial institutions that should be permitted in a consortium or even in a multiple banking arrangement,” Gandhi said in a speech at an industry event in Mumbai.
He said that there was an urgent need for banks to reduce their stressed assets, given the impact on liquidity and capital.