Mantra for low NPAs? Only risk management people should meet promoters

The head of a leading bank has minimal interaction with promoters

Given the spate of scams that has hit the banking sector, the CEO of a leading non-banking finance company in a board meeting recently commented that the only way to deal with such situations is to ban banks’ top managements from meeting promoters of companies. “When promoters approach banks for loans, only the risk management people should meet them.” The rationale being that the risk management team meets promoters in the presence of the top management, they tend to get influenced by the closeness of the top management and promoters. In fact, the CEO mentioned that the head of a