The Reserve Bank of India has asked banks to set up escrow accounts while extending loans to real estate companies, according to The Economic Times. The central bank is asking banks to put an escrow mechanism in place which will keep a check on the end use of funds given by banks to real estate firms.
The newspaper says that ever since the bribery-for-loan scam surfaced at LIC Housing Finance and a few public sector banks, the RBI has been looking for ways to ensure a smooth and transparent flow of bank funds.
The newspaper quotes Anil Kumar, joint managing director and chief executive at Delhi-based real estate firm Ansal, as saying:
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