The lender’s ‘white box’ is the reason why a borrower cannot get an interest-free loan in India, a regulator has said.
The Reserve Bank of India (RBI) said it has asked the State Bank of New Delhi (SBN) to review its loan agency’s loan portfolio as part of a nationwide review.
RBI Chairman Raghuram Rajan said on Tuesday the regulator was looking into the issue.
The regulator has also asked the banks to put their loan portfolio online so that it can be monitored.
Rajan said he will present the regulator’s findings to the RBI on Wednesday.
The regulator said the loans made through its loan-issuing banks were loan products under the purview of the state bank regulatory commission (SBRC), which regulates lenders under the Financial Services Ordinance.
In May, RBI appointed SBN as the primary loan issuing bank for the state government.
“We have received information from the SBN that the loan issued through the SGN banks had been under the supervision of the RBI and had been granted loan forgiveness by the RBI under the FCRA,” Rajan had said at the time.
According to the regulator, the loan was not approved by the SBRC, and hence it was not covered under the Act.RBI’s inquiry into the loan agency said that the bank had given an “unsatisfactory” reply to the question about the “black box” which had the names of more than 4,400 loan agents.
SBN is a joint venture between the State Development Bank of Pakistan and the State Industrial Development Bank.