Emerging dynamics of effective credit monitoring in Indian banks- a professional perspective

The very objective of Credit monitoring is to ensure that the quality of asset remains performing, earning and must have good conduct and health. Credit sanction is an one time exercise but credit monitoring is a continuous process. Credit Monitoring system through various tools focuses on early detection of unsatisfactory symptoms, analysis of the reason of the symptoms, fast remedial measures, prevention of loan loss, improving and sustaining asset qualities and post sanction surveillances. The recently introduced framework for revitalizing distressed assets in the economy lays down guidelines for early recognition of financial distress, information sharing among lenders and co-ordinated steps for prompt resolution and fair recovery for lenders. Banks need to put in place improved credit monitoring architecture with the help of technology, upgraded skill sets, retained legal specialists, lateral hiring recovery experts supported by well entrenched policy framework to guide the asset quality follow up mechanism. The key challenge for Indian banks is to expand credit portfolio and effectively manage NPAs while maintaining asset quality and profitability. Though, management of asset quality is a balance sheet issue of individual banks, it has wider macro economic implications. Therefore, continuous improvement in asset quality on sustainable basis through well structured and effective credit monitoring has to be practiced as Mantra in a missionary zeal in order to survive global competition.