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Maximum Limit on Advances � Advances to Directors and Their Relatives
and to Concerns in which Directors or Their Relatives are interested
UBD.
DS. Cir. 27 -13.05.00 dated 4th December 2002
Please
refer to our Circular DS.PCB.Cir.76/13.05.00/ 1993-94 dated 26 May 1994 on the
captioned subject. As per the instructions contained therein, a primary (urban)
cooperative bank may not grant or renew secured loans or advances or other
financial accommodation to all its directors and to the concerns in which its
directors are interested (including such unsecured loans and advances, etc. to
them to the extent permitted under Section 20 read with Section 56 of the
Banking Regulation Act, 1949) and unsecured or secured loans or advances or any
financial accommodation to the relatives of the directors and the concerns in
which such relatives are interested, all put together, for a sum exceeding 10%
of its total of time and demand liabilities (DTL).
2.
The matter has been reviewed and it has been decided that the above
overall ceiling for loans and advances to directors, their relatives and
concerns in which they are interested should be brought down to 5 per cent of
the DTL from the earlier ceiling of 10% of the DTL with immediate effect. Those
banks whose outstanding of such loans on 30 September 2002 or thereafter, were
more than 5% of their DTL are advised not to sanction any fresh loans/renew the
existing facilities to their directors, their relatives and concerns in which
they are interested so as to reduce the outstanding of such loans and bring
these within the prescribed limit of 5% at the earliest but not later than 31
March 2003. Urban cooperative banks are therefore required to initiate immediate
steps to bring down the excess dues within the prescribed limit as early as
possible but not later than 31 March 2003. The other instructions contained in
the above directive remain unchanged.
3.
Accordingly, an amended directive UBD. No. DS. DIR. 3 /13.05.00/2002-03
dated 4th December 2002 is enclosed.
4.
Please acknowledge receipt of the circular to the concerned Regional
Office.
Maximum
limit on advances
UBD
No. DS.DIR. 3 - 13.05.00 dated 4th December 2002
In
exercise of the powers conferred under Section 21 and Clause (b) of the Proviso
to clause (b) of Sub-Section (1) of Section 20 and Section 35A read with Section
56 of the Banking Regulation Act, 1949, and in partial modification of its
Directive UBD (PCB) DIR 5/ 13.05.00.93-94 dated 26 May, 1994 as amended from
time to time, the Reserve Bank of India, being satisfied that it is necessary
and expedient in the public interest so to do, hereby directs that:
The
Clause (iii) of paragraph 1 of the aforesaid directive since renumbered as
Clause (ii) vide our directive No. UBD. DS. PCB. DIR.18/ 13.05.00/ 95-96 dated
16 January 1996 shall be substituted by the following:
�Advances to all Directors and their
relatives put together (iii) No primary co-operative bank shall make or provide
or renew secured loans or advances or other financial accommodation to all its
directors and to the concerns in which its directors are interested (including
such unsecured loans and advances, etc. to them to the extent permitted under
Section 20 read with Section 56 of the Banking Regulation Act 1949) and
unsecured or secured loans or advances or any financial accommodation to the
relatives of the directors and the concern in which such relatives are
interested, put together, for a sum exceeding 5% of its total of time and demand
liabilities.
Provided that the
aggregate of amount outstanding in respect of such unsecured advances to:
A)
The directors and the concerns in which directors are interested; and
B)
To the relatives of the directors and to concerns in which the relatives
are interested; shall not at any time, taken together, exceed:
(a)
Rs. 50,000/- or 5% of the total of the time and demand liabilities,
whichever is lower, in cases where the total of the time and demand liabilities
does not exceed Rs. 1.00 crore.
(b)
Rs. 1.00 lakh, in cases where the total time and demand liabilities
exceed Rs. 1.00 crore but less than Rs.10.00 crore.
(c)
Rs. 2.00 lakh in cases where the total time and demand liabilities exceed
Rs.10.00 crore.�
2.
The other provisions of the directive UBD No. (PCB) DIR.5/13.05.00/93-94
dated 26 May 1994 shall remain unchanged.
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