Home American history RBI revises personal loan limit for board directors to 5 crore

RBI revises personal loan limit for board directors to 5 crore


Mumbai: The Reserve Bank of India has revised the threshold for the amount of personal loans that can be granted to directors and their families to a maximum of ₹5 crores. Previously, the personal loan threshold that could be granted to any bank manager was ₹25 lakh.

In a circular issued on Friday, RBI also said that banks are not allowed to grant loans of more than ₹5 crore to any parent other than the spouse and dependent children of the president and general managers or other directors of their own bank and other banks. The same applies to any company in which one of the parents other than the spouse and dependent children is a partner, majority shareholder or director.

Proposals for credit facilities in an amount less than ₹25 lakh or ₹5 crores to such borrowers may be sanctioned by the appropriate authority of the financing bank under the powers given to that authority, but the matter should be reported to the board, RBI said.

Personal loans refer to loans granted to individuals and include consumer loans, education loans, loans granted for the creation / valuation of real estate and loans granted for investment in financial assets (stocks, bonds , etc.).

In the past, there have been instances where existing administrators abused their position to provide loans for family members. This is the case of the managing director and CEO of ICICI bank, Chanda Kochhar, who allegedly abused his official position to grant ₹Loan of 3250 crores to Videocon. The loan was part of a counterpart agreement under which Venugopal Dhoot invested ₹64 crore in NuPower Renewables from Chanda Kochhar’s husband.

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