A Critical Analysis On Legal And Operational Aspects Behind The Failure Of Banking Consortium In India
Janaswami Surya Prabha & T Vani Priya, LLM (Corporate & Commercial Law), School of Law, GITAM, (Deemed to be University)
ABSTRACT
In the words of Aristotle, Law is a command of sovereign, but the question is whether in a democratic country like India, was it possible to be a command of sovereign. Because in India, law should be an instrument to regulate the human behavior be it in a social life or a personal life. By having a same intention, banking regulations were introduced. Time to time by adopting the new changes in the financial transactions’ perspectives, many amendments as well as new methodologies were brought in but the risk effective means were not calculated in primary level.
Formally, one of such new methodology was that of Banking Consortium. The primary intention in bringing the concept of banking consortium was that to maintain a limited exposure and to have a risk sharing effect. Usually, the risk will be less when the borrowing amount is less, but in case of high amount then the risk will be that of a higher enough. In order maintain the most effective procedure, consortium idea was introduced.
In this Study researcher, explains the meaning, scope and extent of Banking consortium by considering the advantages and by considering the intention of the makers to introduce the particular aspect. At length, the study will also be observing and identifying the legal and operational aspects behind the failure of banking consortium in India. At par, will be concluded by considering the formal procedural aspect by forming an opinion on the model of consortium.
Keywords: Advantages of Banking Consortium; identifying legal and operational aspects; limited exposure compliance; Meaning of Banking Consortium; Risk Sharing;
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