The Reserve Bank of India today said banks may face penal action if they fail to adhere to the norms regarding sharing of information relating to credit, derivatives and unhedged foreign currency exposures among themselves. Banks have been asked to put in place an effective mechanism for information sharing by end-December 2012.
The banking regulator has asked banks to develop a proper information sharing mechanism in the wake to sharp increase in non-performing asset and also restructured assets.
“It has been observed that of late the NPAs and restructured loans of banks have been increasing significantly. A major reason for deterioration in the asset quality of banks is the lack of effective information sharing among banks,” the central bank said.
The central bank noted that lack of effective and timely information exchange among banks may also result in occurrence of frauds.
Banks have been asked to ensure that fresh sanctions of loans, from 1 January, to new or existing borrowers should be done only after obtaining necessary information.
“Non-adherence to the above instructions by banks would be viewed seriously by the Reserve Bank and they would be liable to action, including imposition of penalty, wherever considered appropriate,” it said.