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ARTICLE · 20 OCTOBER 2015

Loans & Advances By Banks To Their CEO/WTDS

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The Reserve Bank of India (RBI), vide circular DBR.Dir. BC.No.38/13.03.00/2015-16, dated September 16, 2015, allowed commercial banks to grant loans and advances to its Chief Executive Officer/ Whole Time Directors...

IndiaFinance and Banking
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The Reserve Bank of India (RBI), vide circular DBR.Dir. BC.No.38/13.03.00/2015-16, dated September 16, 2015, allowed commercial banks to grant loans and advances to its Chief Executive Officer (CEO)/ Whole Time Directors (WTDs), without seeking prior approval of RBI, subject to certain conditions.

Section 20 of Banking Regulation Act, 1949 (B.R. Act, 1949) prohibits banks from granting any loan or advance to any of its Directors. However, RBI has specified that for the purposes of the said Section, the following loans/advances granted to the CEO / WTDs will not be considered as 'loans and advances':

i. Loan for purchasing of car

ii. Loan for purchasing of personal computer

iii. Loan for purchasing of furniture

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