Page 223 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes 5. In the early 1990s PSBs started suffering from acute capital inadequacy and lower/negative
profitability. The parameters set for their functioning did not project the paramount need
for these corporate goals
6. The banks had little freedom to price products, cater products to chosen segments or
invest funds in their best interest

7. Audit and control functions were not independent and thus unable to correct the effect of
serious flaws in policies and directions
8. Banks were not sufficiently developed in terms of skills and expertise to regulate the
humongous growth in credit and manage the diverse risks that emerged in the process
9. Inadequate mechanism to gather and disseminate credit information amongst commercial
banks.

Task Make a comparison of NPAs between HDFC Bank and SBI Bank for the last
five years.

15.4 NPA Management Tools

During the past few years NPAs are increasing continually. This was due to show ineffective
recovery of bank credit, lacuna in credit recovery system, inadequate legal provision etc. Various
steps have been taken by the government to recover and reduce NPAs.

15.4.1 Preventive Measures of NPA

Formation of the Credit Information Bureau (India) Limited (CIBIL)

With a view to developing an institutional mechanism for sharing of information on borrowers/
potential borrowers among banks and financial institutions, Credit Information Bureau (India)
Ltd. (CIBIL) was formally launched on May 5, 2004, for collecting, processing and sharing credit
information on the borrowers of credit institutions and serve as an effective mechanism for
curbing the growth of Non-performing Assets (NPAs).

Did u know? CIBIL is India’s first credit information bureau.

Promoters

CIBIL’S equity is held by State Bank of India, Housing Development Corporation Limited, Dun
& Bradstreet Information Services India Private Limited and Trans Union International Inc. The
shareholding pattern is in the proportion of 40:40:10:10 respectively.

Coverage

CIBIL is a composite credit Bureau, which caters to both commercial and consumer segments.
The consumer Credit Bureau covers credit availed by individuals while the Commercial Credit
Bureau covers credit availed by non-individuals such as partnership firms, proprietary concerns,
private and public limited companies, etc.

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