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RBI Update: After the Hindenburg Research report regarding Adani Group came to the fore, the Reserve Bank of India, the regulator of the banking sector, is keeping a close watch on the country’s top 20 corporate houses, which have the most outstanding loans from banks. RBI is closely monitoring the profitability as well as financial performance of these companies.
According to an Economic Times report, the RBI has already been monitoring these companies regularly, but in addition to this, it is now strictly monitoring the Central Repository of Information on Large Credits (CRILC) along with other financially important institutions. RBI is monitoring the profits of corporates, their financial performance, debt raised by companies from abroad through ECB (External Commercial Borrowing) or bonds to ascertain whether the company is in any financial crisis.
This monitoring system has been designed so that the crisis can be detected in advance and it can be ensured that it does not affect the balance sheet of the banks. According to the report, the data of the companies, their business models and loan portfolio along with other parameters are being monitored. RBI is also cautious because banks have come out of it after battling the NPA crisis for a long time. The NPA of commercial banks has come down from 11.2 per cent in March 2018 to 5.8 per cent in March 2022.
After the Hindenburg report, when questions were being raised about the loans given to the Adani group, the regulator had issued a statement saying that India’s banking sector is stable and resilient. Being the regulator, RBI maintains surveillance to maintain financial stability. RBI had said that RBI has Central Repository of Information of Large Credit Database System to monitor loans above five crore rupees, through which monitoring of large loans is done.
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