The government has decided to hike the loan sanctioning power of public sector bank chairmen and managing directors to Rs 200 crore (Rs 2 billion) for group advances and Rs 100 crore (Rs 1 billion) for single borrowers from April 1, 2006.
"The ceilings have been hiked from the earlier level of Rs 30 crore (Rs 300 million). The board of directors of each of the nationalised banks will be able delegate up to the revised limits from next month," a government official said.
As part of greater delegation of power to the brass, the power to write off or waive loans will be enhanced to Rs 1 crore (Rs 10 million) from Rs 10 lakh (Rs 1 million) at present.
Executive directors of public sector banks will be allowed to delegate powers up to 75 per cent of the limits delegated to chairmen and managing directors.
According to the new limits, banks having advances exceeding Rs 25,000 crore (Rs 250 billion) will be able to delegate sanctions up to Rs 200 crore (Rs 2 billion) for group advances and Rs 100 crore (Rs 1 billion) for single-borrower advances.
In case of banks having advances up to Rs 25,000 crore (Rs 250 billion), chairmen and managing directors will have the power to sanction loans up to Rs 120 crore (Rs 1.2 billion) for group advances and Rs 60 crore (Rs 600 million) for single-borrower advances. The power to waive and write off loans will be restricted to Rs 75 lakh (Rs 7.5 million) in such cases.
"With the hike, banks can delegate higher limits to their zonal officers. Therefore, it gives banks a lot of operational flexibility," the chairman of a leading public sector bank said.
Earlier, bank boards were authorised to sanction a limit of Rs 30 crore (Rs 300 million) in case their advances stood at Rs 5,000 crore (Rs 50 billion) or above and Rs 15 crore in case of their having lower levels of advances.
Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
More from rediff