It seems government banks are going to face some toughest challenge in coming days especially in case of loans and lending.
The Finance Minister has advised bank not to follow the rating agencies score i.e. CIBIL etc while taking the credit decisions.
“We have (rating) agencies that rate banking functions and talk about customers and their (credit) worthiness. They are not advisory. They are only an indicator of what the customer is," Sitharaman said.
“Good, judicious mix of personal connect, assessment, and good data information that is coming to you is what is required. Conveniently going to the extreme, forgetting the branch-level customers have not done us good."Read - What are the possibilities of Bank Mergers from April 1st ?
“Today, we want technology. But have we gone so far that (banks) rely blindly on them, on the rating agencies and at the end of the day the strength that you have at the personal level is no longer there. Probably you are misjudging a customer based on the rating," said the minister.
She said there was over-reliance on data from credit rating agencies. She asked PSB chiefs if the RBI or IBA ever communicated to them to "blindly" follow rating agencies. It should be a judicious mix of local connect and data, she stressed.
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