Reserve Bank of India vide a notification dated 23rd July,2021, has amended the Master Circular on Loans and Advances – Statutory and Other Restrictions dated 1st July, 2015. The amendment provides that unless sanctioned by the Board of Directors/Management Committee, banks should not grant loans and advances aggregating Rupees five crore and above to:
(a) any relative other than spouse and minor / dependent children of their own Chairmen/Managing Directors or other Directors;
(b) any relative other than spouse and minor / dependent children of the Chairman/Managing Director or other directors of other banks;
(c) any firm in which any of the relatives other than spouse and minor / dependent children as mentioned in (a) & (b) above is interested as a partner or guarantor; and
(d) any company in which any of the relatives other than spouse and minor / dependent children is interested as a major shareholder or as a director or as a guarantor or is in control.
