Loans and advances to directors etc - directors as surety/guarantors- Clarification - আরবিআই - Reserve Bank of India
Loans and advances to directors etc - directors as surety/guarantors- Clarification
RBI/2004-05/103
PCB. CIR.10/13.05.00/04-05
August 7, 2004
The Chief Executive Officers of All Primary (Urban) Co-operative banks
Dear Sir/Madam,
Loans and advances to directors etc- – directors as surety/guarantors - Clarification
Please refer to our circular UBD.BPD.CIR.18/13.05.00/03-04 dated October 1, 2003 advising banks not to sanction loans and advances to directors, their relatives and firms/concerns in which they are interested w.e.f 1-10-2003.
2. Certain banks /Federations have sought our clarification as to whether directors can stand as Surety/Guarantor to the loans and advances sanctioned by the Urban Co-operative banks. In this connection, we clarify that sanction of loans and advances against the surety/guarantee of the directors is against the spirit of our above circular. In view of above, the directors and relatives cannot stand as surety/guarantor to the loans and advances (both secured and unsecured) sanctioned by the UCBs.
3. Please acknowledge receipt to the concerned Regional Office of RBI.
Yours faithfully,
Sd/-
(N.S.Vishwanathan)
Chief General Manager