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ARTICLE · 14 JULY 2020

Banking Consortium And It's Legal Aspects

King, Stubb & Kasiva
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The lending of advances has always been one of the primary functions of the bank. However, it also involves risk because the bank as a lender has to suffer if the borrower defaults in payment of...

IndiaFinance and Banking
Aishwarya . S
Aishwarya . S
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The lending of advances has always been one of the primary functions of the bank. However, it also involves risk because the bank as a lender has to suffer if the borrower defaults in payment of the loan. The risk will be comparatively lesser when the amount of money is less but when the amount of money is huge, the risk will be higher and it is during such circumstances the bank indulge in the practice of banking consortium.

What Is Banking Consortium?

Banking consortium refers to the practice where several banks join together and lend money to a single borrower. It consists of three parties namely lead banks, member banks and the borrower. Lead banks refers to those banks which initiate or undertake the banking consortium while member banks are those banks which agree to contribute their share in the amount of loan which is to be sanctioned to the borrower. Under this arrangement, the lead bank will enter into a common agreement with other member banks to provide

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