Credit Monitoring Arrangement (CMA)

Under the credit monitoring arrangement which has been in operation since October 1988, the bank have been authorised to sanction credit proposals of large borrowers with a requirement that the proposals be submitted to reserve bank for post sanction scrutiny considering the responsibility vested with the banks to purvey need based credit to industrial trade, bank were again advised in Jan 1992, to gear up the organisation and administrative machinery to ensure total compliance in implementing the basic financial discipline.

                 The total number of proposals received from post sanction scrutiny under credit monitoring arrangement increased to 2921 as at the end of Dec 1991, from 2135 at the end Dec 1990. The facility wise distribution of total limits at the end of Dec 1991 was 91.4% for WC purposes, 8% for them finances and 0.61 for sale of machinery an deferred payment basis.

      Occupation wise distribution of total WC limits in force at Rs 38768 crore at the end of Dec 1991 suggest that the share followed by trade accounting for 24.8% 

             Within the industrial group, the shares of engineering chemical products and cotton textiles were 24.7% , 18.9%, and 7.8% respectively. The share of industry in the total working capital limits of public sector borrowings was 49.4% while that of trade was 47.9% and for procurement of accountant 32.7%.

Group Approach:

The number of instances of default and serious irregularities in the accounts of some of the large borrowers belonging to certain industrial group has been increasing. This defaults have resulted in the locking of substantial funds of banks and FIs in NPAs against this background a new concept known as group approach has been evolved to ensure that the defaulting promoter, groups or companies are not allowed for the finance from banks or FIs to important new projects or expansion of their existing activities unless they come to terms with banks or FIs to settle their dues atleast within a reasonable time frame with a view to monitoring credit extented by banks to borrowers belonging to large industrial groups a system of submission of the relevant data by bank to the reserve bank as half yearly intervals as been introduced.