An arrangement in which a borrower takes credit facilities from several banks under separate bilateral agreements, each independently appraised, documented and secured, with no common agreement and no lead bank.
Often abbreviated MBA — multiple banking arrangement. It is the alternative to consortium lending, and in practice it is common among mid-sized Indian borrowers.
Why borrowers use it
It is faster and more flexible. There is no consortium meeting to convene, no common documentation to negotiate, and a borrower can add or drop a bank without renegotiating with the others. Pricing can be negotiated bank by bank.
Why it is harder to see
Each lender appraises independently and holds its own security. There is no structural forum in which the lenders see one another’s position, which means that without central reporting a bank may have limited visibility of how much a borrower has drawn elsewhere or whether the account has begun to deteriorate at another lender.
That visibility gap is precisely what supervisory reporting is designed to close. Borrowers with aggregate exposure of ₹5 crore and above are reported to the RBI’s CRILC, including SMA classification, so that stress at one lender becomes visible to the rest. Access to that data is confined to RBI-regulated institutions under the RBI’s rules.
How it appears in a rating document
The lender-wise annexure to a bank loan rating names the banks on each rated facility whether the arrangement is a consortium or multiple banking. The document itself will sometimes state which it is, in the facilities or liquidity section.
Where the document is silent, do not infer. Several banks appearing on one annexure tells you they are named on rated facilities of the same borrower. It does not tell you whether they have a common agreement, shared security, or any awareness of one another.
Related
- Consortium lending — the formal alternative, with a lead bank
- Lender-wise annexure — where the banks are named, whichever arrangement applies
- SMA classification — the stress signal central reporting is meant to share
- What CRILC is
- Glossary index