Following the recent CBI probe into statements submitted by public sector banks that gave funds to operators who were awarded 2G licences in 2008, the Reserve Bank of India (RBI) has asked banks to ensure that the borrowers utilise the funds in an appropriate manner.
The shortcomings include crediting term loan disbursements to the current or cash credit accounts of borrowers, which were later utilised for day-to-day operations, and exclusive reliance on certificates of chartered accountants on the use of funds, the RBI said.
The RBI has also asked banks to carry out post-sanction supervision of loans and carry out scrutiny of periodical progress reports of the operating and financial statements of borrowers. It added that banks should carry out regular visits to the units and inspect securities that have been hypothecated to the banks.
It added that the lenders should also request the borrowers for a certificate on the end-use of funds and in the case of incorrect certification should take prompt action by either withdrawing the loan facility or taking legal measures.
