RBI increases the threshold limits for Personal Loans


Reserve Bank of India vide Circular No. RBI/2021-22/72 dated 23rd July,2021, has amended the Master Circular on Loans and Advances – Statutory and Other Restrictions dated 1st July, 2015. It has increased the threshold limit for personal loans granted to any director of other bank from ₹ 25 Lakhs to ₹ 5 crores. It has also increased the threshold limit to ₹ 5 crores for personal loans given to:
  1. any relative other than spouse and minor / dependent children of their own Chairman/Managing Directors or other Directors;
  2. any relative other than spouse and minor / dependent children of the Chairman/Managing Director or other directors of other banks;
  3. any firm in which any of the relatives other than spouse and minor / dependent children as mentioned in (1) & (2) above is interested as a partner or guarantor; and
  4. any company in which any of the relatives other than spouse and minor / dependent children is interested as a major shareholder or as a director or as a guarantor or is in control.
The term "Personal Loans" means loans given to individuals and consist of (a) consumer credit, (b) education loan, (c) loans given for creation/ enhancement of immovable assets (e.g., housing, etc.), and (d) loans given for investment in financial assets (shares, debentures, etc.) as defined in Circular DBR.No.BP.BC.99/08.13.100/2017-18 dated January 04, 2018 on XBRL Returns – Harmonization of Banking Statistics.

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