Reserve Bank of India Governor Raghuram Rajan has called for the need to tighten loan practices at state-run banks.
"There is a need to tighten loan practices at state-run banks," Rajan said while addressing the annual bankers conference on Tuesday.
"Loan sanctioning process should be shifted from the present committee-based approach to single banker taking up the responsibility," Rajan said, adding, “Technology can go a long way in helping arrive at a better due diligence”.
Talking about risk assessment, Rajan said, "Financiers should put in a robust system of project monitoring and appraisal, including where possible, careful real-time monitoring of costs”.
“It can be noted that currently large loans are sanctioned by a loan approval committee and no individual banker is held responsible if the loan goes kaput,” he added.
Meanwhile, in his last monetary policy review last week, Rajan had kept key interest rates unchanged by saying that banks have not passed on full rate cut benefits.
Rajan&’s three-year term will come to an end on September 4.