MUMBAI, Sept 23: Reserve Bank Deputy Governor S S Mundra today reiterated the central bank’s resolve to further fine-tune the recently-introduced Joint Lenders Forum (JLF) to make the mechanism more effective and transparent.
“We are trying to bring in some more improvements in the JLF mechanism. Very soon, a paper will be out for further refinements,” Mundra told reporters after addressing a CFO summit organised by CII here.
The Deputy Governor made it clear that the purpose is to make consortium lending and restructuring process more transparent and, accordingly “we keep a constant watch on the way JLF functions now”.
Governor Raghuram Rajan had twice in as many months said the central bank is going through the complaints and suggestions from lenders about the irritants in JLF and will smoothen the rough edges to make it more effective.
The central bank made consortium lending more transparent and process-driven last year and replaced a similar structure called the CDR cell. Mundra said RBI now picks individual cases at random, whether it’s JLF or 5/25 (refinance), and its team goes through them.
There have been complaints of large borrowers flexing financial and political muscles to arm-twist lenders into getting loans sanctioned or restructured through the CDR process in the past.
Asked about the troubles at leading auto component maker Amtek Auto, which owes over Rs 26,000 crore to almost 32 lenders and defaulted on a Rs 800 crore worth of foreign currency bonds, Mundra refused to comment.
“We keep a careful watch on whatever is happening in the market, but we don’t comment on individual companies.
“In a large market, when these sorts of events happen, they are a cause of concern. But to believe that a solitary incident can change the dynamics of the market is not something I subscribe to,” he said.
On reports that the government wants to change the functioning of IDBI Bank into something similar to Axis Bank in which it is the single-largest owner with around 13 per cent stake and whether the government and RBI are on same page on this, Mundra said he isn’t aware of such developments.
“I won’t know. When the government was speaking, I wasn’t at the (RBI) headquarters… It’s not something I am aware of,” he said. (PTI)
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