CIRCULAR NO. DOR.CRG.CRS.CIR.NO.5/13.05.000/2020-21, Dated 08.02.2021
The Reserve Bank of India (RBI) has revised directions on the subject issued to Primary (Urban) Co-operative Banks (UCBs). With the advent of this notices, UCBs shall not make, provide or renew any loans and advances or extend any other financial accommodation to or on behalf of their directors or their relatives, or to the firms/companies/concerns in which the directors or their relatives are interested.
Additionally, the directors or their relatives or the firms / companies / concerns in which the directors or their relatives are interested shall also not stand as surety/guarantor to the loans and advances or any other financial accommodation sanctioned by UCBs.
However, certain category of transactions are outside from the purview of amended norms such as Regular employee-related loans to staff directors, Normal loans, as applicable to members, to the directors on the Boards of Salary Earners'.
Normal employee-related loans to Managing Directors / Chief Executive Officers of UCBs, and Loans to directors or their relatives against Government Securities, Fixed Deposits and Life Insurance Policies standing in their own name.