Banks Allowed to Grant Loans to their CEOs, Directors: Says RBI

Banking News

Business Mantra: Faridabad

For purchase of Car, Personal Computer, Furniture, Construction/Purchase of House for personal use or Festival Advance or Credit Limit for a Credit Card, Reserve Bank of India has allowed Banks to grant Loans to their CEOs and Directors.
Under Section 20 of Banking Regulations Act, 1949 Banks have been restricted to grant loans to their CEOs, CMDs, EDs & Directors. Now RBI has taken a soft view of this and has asked the Banks to approach them for permission on case to case basis to grant loans to CEOs, CMDs, EDs & Directors of Banks.
The rate of interest charges on such loans shall not be based on Base Rate of the Banks but shall be charges on the rates applicable for staff members of Banks and shall not be less than the same.

This announcement by RBI is not applicable on loans of business nature and loans to the relatives of CEOs, CMDs, EDs & Directors.

Author: Lalit Virmani (Author is a Retired Senior Banking Executive) You may contact the author at

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