RBI revises restrictions for providing loans & advances to bank directors, relatives

Reserve Bank of India revised various regulatory restrictions for providing loans and advances to bank directors and their relatives. Personal loan of maximum five crore rupees can be granted to directors of other banks. Earlier this limit was 25 lakh rupee. Approval of directors or management committee will be required to sanction loans of five crore and above to any relative other than spouse and minor, dependent children of their own Chairman, Managing Directors or other Directors. Same condition will be applicable to family members of Chairman, Managing Directors or Directors of other banks.
Same conditions will be applicable in case these family members are partners or guarantors of a firm or company. The RBI has said that loans of less than five crore rupees to these persons can be sanctioned by appropriate authority but the matter should be reported to the Board. Provided that a relative of a director shall also be deemed to be interested in a company, being the subsidiary or holding company, if he/she is a major shareholder or is in control of the respective holding or subsidiary company.