- Coverage: Now includes promoters, key management personnel (KMPs), shareholders holding >5% equity, entities with significant influence, and their relatives.
- Relevance: Commercial Banks, Small Finance Banks, Cooperative Banks, NBFCs, and All India Financial Institutions.
- Objective: Harmonize lending to related parties, make legacy provisions more logical, and establish a harmonized regulatory framework.
- Materiality Thresholds (Board Sanction Required for Loans Over):
- Banks with asset size >Rs10 lakh crore – Rs50 crore
- Banks with assets Rs1–10 lakh crore – Rs10 crore
- Small banks – Rs5 crore
Permitted Advances:
- Advance to public trusts where trustee is a director.
- Advance to directors supported by government securities, insurance, or fixed deposits (LTV ≤100%).
- Personal advances to employee-directors according to employee norms; non-investment advances for directors/CEOs within prudential limits.
- Relevance: Improves monitoring of large related-party exposures and reinforces governance in the financial sector.
Month: Current Affairs - October 16, 2025
Category: BANKING, FINANCE and BUSINESS