RESERVE BANK OF INDIA Collection and Furnishing of Credit Information
Mter the insertion of Chapter III-A in the Reserve Bank of India Act in the year 1962, the Reserve Bank is empowered to collect credit information from banking companies and to furnish such information in a consolidated form to any banking company applying Jor the same along with the prescribed fee. The term credit information means any information relating to
(i) the amounts and the nature of loans or ad¬vances and other credit facilities granted by a banking company to any borrower or class of borrowers:
(ii) the nature of security taken from any borrower or class of borrowers for credit facilities granted to him or to such class;
(iii) the guarantee furnished by a banking com¬pany for any of its customers or any class of its cus¬tomers;
(iv) the means, antecedents, history of financial transactions and the creditworthiness of any borrower or class of borrowers; and
(v) any other information which the Bank may con¬sider to be relevant for the more orderly regulation of credit or credit policy.
The term 'credit information' thus has much wider coverage and significance.
The -term banking company includes, for this pur¬pose, the scheduled and non-scheduled banks, the State Bank of India and its subsidiary banks, the nationalised banks and any other financial institu¬tion notified by the Central Government. The term bor¬rower is also defined so as to include in case of a com¬pany its subsidiaries also, in case of Hindu undivided family any member of the farhily or any firm in which such member is a partner; in case of a partnership, any partner or any firm in which he is a partner and in case of an individual any firm in which such individual is a partner.
The credit information is required in respect of big borrowers only. The Reserve Bank has directed the banks to submit credit information on the prescribed forms. The credit limits for the purpose of submitting half-yearly returns (as on the last Friday of April and October every year) by banks to Reserve Bank relating to information on borrowers have been raised in 1984 from Rs.5 lakhs and over to Rs. 10 lakhs and over in case of secured advances and from Rs. Ilakh and over to Rs. 5 lakhs and over in respect of unsecured advances.
Section 45-C empowers the Reserve Bank to direct any banking company to submit to it the statements relating to credit information in the specified time and form. Eveiy banking company shall be bound to com¬ply with such direction.
Under Section 45-D, a banking company may make an application to the Reserve Bank to furnish the ap-plicant with such credit information as may be speci¬fied in the application in connection with any person. The Reserve Bank shall furnish the credit information in its possession but it shall not disclose the names of the banking companies which have submitted such in¬formation to the Bank.
Any credit information submitted by a banking company to the Reserve Bank or by the Reserve Bank to any banking company shall be treated as confiden¬tial and shall not be published or disclosed except for the following purposes specified in the Act: '
(a) disclosure by any banking company of arlY in¬formation furnished to the Reserve Bank with the pre-vious permission of the Reserve Bank ,
(b) publication by the Reserve Bank of any infor¬mation collected by it under this Section in such con¬solidated form as it may think fit without disclosing the name of any banking company or its borrowers, and
(c) the disclosure or publication by 'the banking company or by the Reserve Bank of any credit infor¬mation to any other banking company or in accor¬dance with the practice and usage customary among bankers or as permitted or required under any other law.
(d) The credit information received by a banking com¬pany under this clause shall not be published except in accordance with the practice and uS<:lge customary among bankers or as permitted or required under any other law.
(e) Clause above, inserted by the Reserve Bank of India (Amendment) Act, 1947, provides for statutory protection to banks to' exchange credit information freely amongst themselves.
Promotional functions
With economic growth assuming a new urgency since Independence, the range 'of the Reserve Bank's functions has steadily widened. The Bank now per¬forms a varietyof developmental and promotional func¬tions, whiCh, at one time, were regarded as outside the normal scope of central banking. The Reserve Bank was asked to promote banking habit, extend banking facilities to rural and semi-urban areas, and establish and promote new specialised financing agencies. Ac¬cordingly, the Reserve Bank has helped in the setting up of the IFCI and the SFC; it set up the Deposit In¬surance Corporation in 1962, the Unit Trust of India in 1964, the Industrial Development Bank of India also in 1964, the Agricultural Refinance Corporation of In¬dia in 1963 and the Industrial Reconstruction Corpo¬ration of India in 1972. These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilise savings, and to provide industrial finance as well as agricultural finance. -f.-s far back as 1935, the Reserve Bank of India set up the Agricultural Credit Department to provide agricultural credit. But only since 1951 the Bank's role in this field has become extremely important. The Bank has devel¬oped the co-operative credit movement to encourage saving, to eliminate moneylenders from the villages and to route its short term credit to .agriculture. The RBI has set up the Agricultural Refinance and Develop¬ment Corporation to provide long-term finance to farm¬ers.
Classification of RBis functions,
The monetary functions ~so known as the central banking functions of the RBI are related to control and regulation of money and credit, i.e., issue of cur¬rency, control of bank credit, control'of foreign exchange operations, banker to the Government and to the money market. Monetary functions of the RBI are significant as they control and regulate the volume of money and credit in the country.
Equally important, however, are the non-monetary functions of the RBI in the context of India's economic backwardness. The supervisory function of the RBI may be regarded as a non-monetary function (though many consider this a monetary function). The promotion of sound banking in India is an important goal of the RBI, the RBI has been given wide and drastic powers, under the Banking Regulation Act of 1949 - these P9w¬ers relate to licencing of banks, branch expansions'li¬quidity of their assets, management and methods of working, inspection, amalgamation, reconstruction and liquidation. Under the RBI's supervision and inspec¬tion, the working of banks has greatly impro'l'ed. Com¬mercial banks have developed into financially and op¬erationally sound and viable units. The RBI's powers of supervision have now been extended to non-bank¬ing financial intermediaries. Since independence, par¬ticularly after its nationalisation 1949, the RBI has followed the promotional functions vigorously and has been responsible for strong financial support to in¬dustrial and ageicultural development in the country.
