MUMBAI, SEPT. 1:  
Cracking the whip on banks for delay in disposal of loans to borrowers, RBI asked banks to set up timelines and review pending loan applications beyond specific period.
Within 30 days, banks are advised to clearly delineate the procedure for disposal of loan proposals up toRs. 2 lakh, with appropriate timelines, and institute a suitable monitoring mechanism for reviewing applications pending beyond the specified period, RBI said highlighting from its guidelines on Fair Practices Code for Lenders.
The Central Bank observed that there have been inordinate delays by banks in conveying their credit decisions leading to delays in project implementation.
Infrastructure projects worth over Rs. 7 lakh crore have been locked up in 215 projects spread across power, roads, ports, cement and steel, each with an estimated cost of Rs. 250 crore or more.
In addition, India’s credit growth has remained sluggish amid a slowing economy amid high interest rates.
For the fortnight ended August 8, year-on year credit growth in the banking sector fell to its lowest in over four years. On a year-on-year basis for that fortnight, credit grew 11.64 per cent as compared to growth of 13.29 per cent in the previous fortnight (ended July 25).
 “While banks are required to carry out necessary due diligence before arriving at credit decisions, timely and adequate availability of credit is a pre-requisite for successful implementation of large projects.”
It added that a similar practice of time bound decision making may be required in the case of other loans too.
Reiterating that due diligence requirements should not be compromised, RBI said, “Banks may also make suitable disclosures on the timelines for conveying credit decisions through their websites, notice-boards, product literature, etc.”