Don't Outsource Loan Processing Tasks: RBI To Bankers
NEW DELHI: Cautioning banks against a herd mentality in rushing to fund specific sectors, Mundra asked them to assess credit risks before giving loans to sunrise sectors.
Concerned over the rising number of loan default cases, the Reserve Bank warned lenders against outsourcing their credit processing activities to third-party entities.
"We encourage the banks that whatever is the non-core activity it should be outsourced. Let me tell you credit processing is not a non-core activity. I would say it is most core activity of a banker," RBI Deputy Governor S S Mundra said here at an Assocham event.
"If credit processing is also outsourced then I think it will lead to a kind of situation what we are witnessing now," he said, hinting at the mounting bad loans in the banking system.
As per the data made available by the RBI, the gross NPAs (non-performing assets) of the PSU banks stood at 
2,60,531 crore, as on December 2014.
The total number of defaulting borrowers, having 10 crore and above at the end of September 2014, stood at 2,897 with outstanding amount of 1.60 lakh crore.
Talking about imprudent and non-cooperative borrowers, willful defaulters, Mundra said, "It is important that the errant borrowers are quickly brought to book and recovery proceedings be completed as early as possible."
A non-performing account of whatever origin and pedigree is a drag on the banking system and increases the cost of intermediation, which pinches an honest borrower the most, he said.
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