Consortium Finance

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The quantum of fund required by big businesses/ corporates for various purposes like expansion, equipment purchase, plant set up, working capital etc. is huge which involves high risk for a single bank to provide the loan required.
Consortium finance is the way by which few banks come together and extend the loan facilities by sharing the loan amount between themselves.
This is also known as joint financing. Loan requirements of government and public sector units are also financed through consortium.
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1. DEVTECH FINANCE CREDIT MANAGEMENT MODULE CONSORTIUM FINANCE

2. INTRODUCTION The quantum of fund required by big businesses/ corporates for various purposes like expansion, equipment purchase, plant set up, working capital etc. is huge which involves high risk for a single bank to provide the loan required. Consortium finance is the way by which few banks come together and extend the loan facilities by sharing the loan amount between themselves. This is also known as joint financing. Loan requirements of government and public sector units are also financed through consortium.

3. CONSORTIUM FINANCING PROCESS

4. CONSORTIUM FINANCING PROCESS CONTINUED

5. ROLE OF THE LEAD BANK To arrange fund sanctioning of adequate limit to the borrower To ensure coordination among member banks involved in financing Arrange quarterly meetings of the member banks to discuss about the loan account performance and borrower’s conduct To obtain documents from borrower and share with other member banks To get the unit inspection done by two banks jointly at regular interval

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