Consortium Roles
Defining the strategic interplay between Lead Banks, Participants, and Borrowers.
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Role of the Leader Bank
The leader assumes the pivotal role in managing the consortium, acting as the primary interface through a Consortium Committee.
Primary Operational Functions:
- Convening consortium meetings and maintaining continuous dialogue with the borrower.
- Leading the joint appraisal process and preparing Joint Appraisal Memoranda.
- Coordinating board approvals and obtaining RBI/CAS clearances wherever necessary.
- Finalizing common loan documents and managing charge registration with the ROC.
- Holding securities, mortgage deeds, and documents on behalf of all participants.
- Conducting regular inspections and ensuring compliance with accepted norms.
Consortium Hub
The Lead Bank acts as the fulcrum for all communication, security holding, and regulatory interface.
Role of Participating Banks
Collaborative Participation
- Share annual/adhoc increase proportionately.
- Active contribution of expertise in meetings.
- Adherence to majority consortium decisions.
Discipline & Ethics
- No unilateral recall of advances.
- No arbitrary variation in margins/rates.
- No soliciting of business via indulgence.
Role of the Borrower
Borrowers are central to the success of the consortium arrangement and must ensure transparency and equitable distribution of business.
- Identify partners for formation or enlargement of the consortium.
- Timely submission of all financial papers, stock statements, and QIS data.
- Abide strictly by all decisions taken by the consortium.
- Equitable distribution of ancillary and CC business among all participants.
- Divulge any management shifts, ownership changes, or symptoms of sickness.
- Facilitate joint/individual inspections by member banks.
Strategic Advantages
Liquidity Buffer
Funds constraints in one bank will not severely affect the borrower.
Expertise Access
Collective knowledge of multiple bank specialists is available.
Geographic Reach
Facilitates smooth handling of transactions across different regions.
Scale Support
Grows with the credit needs of the borrower year after year.
RBI Waivers
Certain CAS formalities are waived in joint financing with IDBI.
Operational Continuity
Disruptions in one bank don't block daily business operations.