Banks Tighten Oversight On Big-Ticket Loans Above Rs 250 Crore

Public sector banks are increasing attempts to tighten control over high-value loans, especially those over Rs 250 crore. As part of continuing reforms in the banking system, there is a renewed emphasis on enhancing post-sanction monitoring to identify early any likely financial anomalies and prevent a future accumulation of stressed assets. The initiative is a critical element of the government's Enhanced Access and Service Excellence (EASE) reforms aimed at enhancing the overall efficiency and resilience of the banking system.

A key component of this strategy is the reactivation of Agencies for Specialised Monitoring (ASMs), particularly in consortium lending, where loans are disbursed collectively by a group of banks. Introduced initially to secure proper utilisation of funds and to reduce the threat of diversion or default, the agencies are now poised to serve a wider and institutionalised purpose. Public-sector banks are setting a target for scaling up the utilisation of ASMS in loans under high-ticket-size and sector-based schemes to cover all project phases—from release to delivery or repayment.

In synchronisation with this design, banks already keep sanction-related activities and loan supervision related to large tickets as separate lines. The sets for loan checking and approval remain apart from entities now that manage to oversee loan conduct once releases were made. This structural reform is aimed at enhancing objectivity and raising accountability at each phase of the loan cycle. For all loans over Rs 250 crore, the posting of ASMs is being made an automatic requirement in order to enhance post-sanction follow-up and raise potential concerns at an early point in time.

Management officials well versed with the events informed The Economic Times that such steps aim to build upon existing risk management systems. Learning from experiences—particularly cases related to fund diversion—banks are looking for putting in place mechanisms that can identify early warning signals and react with requisite corrective measures.

The Indian Banks' Association (IBA) has proceeded with renewing and enlarging the panel of ASMs, with fresh recruitments to hold good till 2028. In specialised sector cases, banks can go on availing the services of ASMs during the term of the loan depending upon the risk profile and the complexity of the project.

In addition to the enhanced usage of monitoring agencies, EASE 8.0 also contains other collaborative changes. Public sector banks are in the process of establishing a single digital portal for consortium lending so that lenders are better coordinated. There are also plans to establish a joint collections entity and a common platform for recovering bad loans. These measures are likely to enhance operational efficiency and facilitate better resolution of non-performing assets.

This fresh focus on monitoring arrives when public sector banks are reporting robust financial performance. During the first nine months of FY25, PSBs have reported a 31 per cent rise in year-on-year aggregate net profits, a historic high of Rs 1,29,426 crore. Concurrently, the outstanding net non-performing assets were Rs 61,252 crore, reflecting better asset quality.

With exposures of larger sizes being riskier, especially in niche segments, the revised monitoring framework is viewed as a step in the direction of encouraging prudent lending. By combining lessons of the past in lending and tightening controls post-disbursement, public sector banks seek to sustain credit growth momentum while ensuring asset quality. The focus on early identification and prompt action is in sync with the government's approach of encouraging prudent lending and creating a stronger financial system.