• The Reserve Bank of India has raised the limit on loans that can be sanctioned by a bank to any director or associates of other banks, without board approval to Rs 5 crore. Earlier this limit was Rs 25 lakh.
• However, for loan amounting to above Rs 5 crore, banks should not grant loans and advances, unless sanctioned by the board of directors or the management committee.

The new regulations will apply to:

• Bank Directors, including the Chairman/Managing Director, of other banks, any firm in which they are interested as a partner or guarantor, or any company in which they hold substantial interest or is interested as a director or as a guarantor.
• All scheduled commercial banks, except regional rural banks, small finance banks and all local area banks.
• The revised limit will be applicable to only personal loans disbursed to any director of other banks, all loans to relatives of bank’s own directors, relatives of directors of other banks, and the companies or firms associated with them.
• RBI has revised this loan limit for the first time in 26 years. The limit of Rs. 25 lakhs was set in 1996.