The ‘concessional window' is off. Relatives of directors of commercial banks won't be able to avail themselves of concessional loans henceforth. The Reserve Bank of India has said that restriction as contained in Section 20 of the Banking Regulation Act, 1949, “will apply to grant of loans and advances to spouse and minor/dependent children of the directors of banks.''

“However, banks may grant loan or advance to or on behalf of spouses of their directors in cases where the spouse has his/her own independent source of income arising out of his/her employment or profession,'' the apex bank said.

Standard procedures

The facility thus granted, however, should be based on standard procedures and norms for assessing the creditworthiness of the borrower.

“Such facility should be extended on commercial terms,'' the RBI asserted.

As mentioned in the circular dated March 1, 1996, all credit proposals for Rs.25 lakh and above should be sanctioned by the bank's board of directors/Management Committee of the board. The proposals for less than Rs.25 lakh might be sanctioned by the appropriate authority in banks in terms of the powers delegated to them, the RBI said.

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