The Reserve Bank of India (RBI) has asked commercial lenders to provide it with details of all Letters of Undertaking issued by them in the past several years, according to four bankers who have seen the directive.
The regulator is ratcheting up pressure on lenders, increasing its scrutiny and laying down deadlines for them to fix gaps in their systems, in the aftermath of the Punjab National Bank fraud.
The RBI wrote to all banks a week ago asking for details of the LoUs they had written, including the amounts outstanding, and whether the banks had pre-approved credit limits or kept enough cash on margin before issuing the guarantees, sources said.
One of the sources said the RBI had asked for details of LoUs issued as far back 2011. —Reuters