Lenders wary of sharing client credit info, fear losing competitive edge
“I don't want my competitors to know the kind of exposure I have to a certain borrowers. Rates offered to customers are where banks compete. If my competitors know the rate I offer, than I can potentially lose a customer,” said a senior official of a leading public sector bank. The official did agree that RBI decision to improve transparency between lenders was in the right direction.
With lenders not fully on board, the banking regulator's move to improve transparency among banks may not generate expected results, said an industry watcher. “We are still not clear about the extent to which this information sharing will happen. If we can ensure this would not turn disadvantageous to banks, then it can be a good way to stop bad borrowers who go to multiple lenders,” said the executive director at another public sector bank.
In second quarter monetary policy review announced on October 30, RBI had directed lenders to put in place a system through which information regarding credit exposure, derivative and unhedged foreign currency exposure may be shared among each other. The move was aimed at reducing the risk posed by non-performing assets and bad borrowers who approach multiple banks at the same time.
“Banks should strictly adhere to the instructions regarding sharing of information relating to credit, derivatives and unhedged foreign currency exposures among
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