The new Government has announced plans to: (i) shift the responsibility for prudential oversight from the Financial Services Authority (FSA) to a new Prudential Regulation Authority (PRA) under the Bank of England; and (ii) to set up a Financial Policy Committee within the Bank of England to “monitor macro issues that may threaten economic and financial stability”.
Banks need to be extra careful when extending crossborder credit. They need to have a proper understanding of the legal infrastructure, the banking and regulatory landscape and the debt recovery processes of the country with which they intend to do business. In India, the cumbersome process of crystallizing collateral led some banks to resort to naming and shaming their non-performing corporate customers.