RBI Taps UCBs For Details Of Loans To Directors

Mumbai, June 26: | Updated: Jun 27 2003, 05:30am hrs
The Reserve Bank of India (RBI) on Wednesday asked all Primary (Urban) Co-operative Banks (UCBs) to submit details of loans granted to directors, their relatives and the firms/concerns/companies, in which they are interested.

The details should be submitted fortnightly from July 15, 2003 and up to September 30, 2003. From October 1, 2003, the prohibition on granting of loans and advances - both secured and unsecured - to the directors etc, will become effective, RBI said.

The RBI has also asked UCBs not to deviate from the guidelines on granting of loans as it would invite penalty as per the provisions of the Banking Regulation Act, 1949.

It has said that loans to directors should also strictly and scrupulously comply with all the guidelines for extension of loans and advances by UCBs, including, careful assessment of requirement of finance based on proper credit appraisal in detail, documentation, and supervision over end-use of funds, etc.

Proper safeguards should also be observed in regard to account opening procedures, custody of documents, loans against deposits, issue of guarantees/ letters of credit, prevention of diversion of funds, sanctioning of loans/ other credit facilities, etc, the RBI said adding that loans granted by UCBs to directors etc should also confirm to the prudential ceiling of 5 per cent of its demand and time liabilities.