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(^428) Financial Management
came to be referred as the Marathe Committee submitted its report in July 1983. The
starting point for the Marathe Committeeís work provided by the objectives of the
CAS, was enlarged and re-defined and noted by the Committee as follows:
(a) To ensure that additional bank credit is in conformity with the approved purposes
and priorities and that the bigger borrowers do not pre-empt scarce resources.
(b) To enforce financial discipline on the larger borrowers where necessary, on
uniform principles;
(c) Where a borrower is financed by more than one bank, to ensure that the
customerís proposal is assessed in the light of the information available with all
the banks; and
(d) To bring about improvement in the techniques of credit appraisal by banks and
their system of follow-up.
Recommendations
The Marathe Committee which was given wide terms of reference to examine the
Credit Authorisation Scheme from the point of view of its operational aspects stressed
that the CAS is not to be looked upon as a mere regulatory measure which is confined
to large borrowers. The basic purpose of CAS is to ensure orderly credit management
and improve quality of bank lending so that all borrowings, whether large or small, are
in conformity with the policies and priorities laid down by the Central Banking Authority.
If the CAS scrutiny has to be limited to a certain segment of borrowers, it is only
because of administrative limitations or convenience; and it should not imply that there
are to be different criteria for lending to the borrowers above the cut off point as
compared to those who do not come within the purview of the Scheme. Further, the
Committee was of the view that it is not possible to avoid delays or improve quality of
lending merely by concentrating on a single point. The borrowers have to do their bit by
providing all the necessary and relevant information in time and in adequate detail. The
long time taken in commercial banks in processing applications has to be reduced by
suitable organisational changes. Similarly the time taken for scrutiny in the Reserve
Bank also requires attention partly because it is the last stage of the process, and
because of earlier delays. it is found more irksome by the borrower. Improvements in
the system as a whole has to be a conscious and continuous process in order to achieve
the desired result. The major recommendation of the Marathe Committee was in the
area of providing an incentive for the borrowers to comply with all the requirements of
the scheme including the information system and for the banks to improve the quality of
credit appraisal. It recommended that ëbanks be allowed discretion to deploy credit in
CAS cases which fulfil the following requirements, without RBIís prior authorisation:
(i) The estimates/projections in regard to production, sales, chargeable current
assets, other current assets, current liabilities (other than bank borrowings) and