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RBI/2005-06/368
DBOD.No.Leg.BC.81/09.11.013/2005-06
April 20, 2006
To
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir,
Exemption from applicability of Section 20 of
the Banking Regulation Act, 1949- Issue of Credit Cards to Directors of banks
Please refer to para 1.2.4 of our Master Circular
DBOD.Dir.BC.
8/13.03.00 /2005-06 dated July 1, 2005 on 'Loans and Advances - 'Statutory
and Other Restrictions', wherein it was advised that for the purpose of section
20 of the Banking Regulation Act, 1949, the term 'loans and advances' shall
not include loans or advances against Government securities, life insurance
policies, or fixed deposit, facilities like bills purchased / discounted, purchase
of cheques, other non-fund based facilities like acceptance / co-acceptance
of bills, opening of L/Cs and issue of guarantees etc.
2. It has further been decided, in exercise
of powers conferred by clause (a) of the Explanation under sub-section 4 of
Section 20 of the Banking Regulation Act, 1949 (10 of 1949), that for the purpose
of aforesaid Section, the term 'loan or advance' shall not include a credit
limit granted under credit card facility provided by the bank to its Directors
to the extent the credit limit so granted is determined by the bank by applying
the same criteria as applied by it in the normal conduct of the credit card
business.
3. Please acknowledge receipt.
Yours faithfully
(Prashant Saran)
Chief General Manager in-Charge
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