« However, the real test of the agreement will be completed once it is used to resolve an account, and if we find that something is missing, the agreement will be improved, » Jayakumar said. A senior executive at the State Bank of India (SBI), who declined to be named, said the same procedure used previously for securities would now apply. « As long as the pari passu (proportional) fee is not abandoned by all banks, the sale is not made. In principle, 66% must automatically engage with other banks, since they have signed the agreement, » he said, adding that « the most important thing is the intention of the agreement ». On the question of whether this would lead to procedural delays and increased costs for both banks and borrowers, the SBI official said: « On the contrary, the whole purpose (of the consortium) is to streamline decision-making and standardize costs. The borrowing company mandates a bank to lead the consortium, commonly referred to as a leading bank. The consortium manager is responsible for the holding of joint loan/advance documents executed by the borrowing company on behalf of the consortium. The « Pari Passu » commission is levied on securities offered by the debt company in exchange for the extension of total credit of all credit institutions from the consortium to the company. The « Pari Passu » commission means that if the borrower dissolves or if the guarantee is sold or sold by other means, the assets on which the levy was collected are distributed in relation to the respective holdings of the creditors (lenders).
The criteria for the burden of syndicated loans are defined in accordance with the Bank of Beijing contract. 1.In Consistent with national industrial policy and local government economic development programmes, Energy, transportation, high-tech industries and key local projects are the main aspects of syndicated loans 2.The subjects of syndicated loans are legal entities legally registered in China in accordance with the provisions of the General Provisions of Loans and Interim Syndicated Loans, or other economic organizations approved by banks To close, each consortium is a consortium, but not all consortia is a consortium. When it comes to credit, the big difference (in my opinion) is that the lender cannot be repaid. With a consortium, the lender can repay one bank and fail another. In the case of a union, there is only one loan, the lender must default on the entire loan, which can create legal complexities and impose other legal consequences on the borrower. They may be similar and the two terms are used as synonyms for each other, but there are technical differences when it comes to transactions, procedures, relationships, legal complexities, etc. The banking consortium is managed by the bank in the following cases: Although the banks consider this measure to be part of the guarantee of credit discipline, analysts say that banks, especially PSBs, have been under unreasing financial pressure (NPA) for some time. Entering a consortium is a risk aversion in the company`s credit portfolio.
With regard to loans to consortia, bankers enter into a joint agreement with borrowers. This agreement addresses issues such as interest rates, disclosure of information about future requirements of the lenders` fund. There is also less chance of asymmetry in information. As defaults have increased, banks have become more cautious about lending to businesses without a level of investment.