THE RESERVE BANK OF INDIA (RBI) HAS RELAXED THE RULES FOR BANK LOANS TO DIRECTORS OF RIVAL BANKS
The Reserve Bank of India (RBI) has stated that banks can grant personal loans up to Rs 5 crore to directors of other banks without the approval of their boards of directors. The previous ceiling was Rs 25 lakh. Following a review, the barrier of Rupees twenty-five lakh for personal loans issued to any director of other banks has been revised to Rupees five crore.
Banks should not offer loans and advances totaling Rs 5 crore or more to any relative other than the spouse and minor/ dependent children of their own Chairman/ Managing Directors or other directors unless the board of directors/ management committee has approved it. Proposals for loan facilities of less than Rs 25 lakh or Rs 5 crore (as the case may be) to such borrowers may be approved by the competent authority in the financing bank, but the matter must be notified to the board, according to the announcement.
Loans to bank directors/relatives of bank directors were restricted in July 2015. In addition to the statutory prohibition on banks lending to their own directors, the RBI ordered that loans of Rs 25 lakh or more must be approved by the board of directors or management committee.
Currently, where a relative of a director retains considerable stake, which is defined as 10% of paid-up capital of Rs 5 lakh, whichever is less, board/management committee approval is necessary for the grant of loans to a company.
WHEN THE DEBT TO BE RECOVERED EXCEEDS RS. 100 CRORES, THE GOVERNMENT REQUIRES E-FILING OF PLEADINGS
The Finance Ministry ordered E-filing of pleadings when debt to be recovered exceeds Rs. 100 crores, which would take effect on July 22, 2021. The government, acting under clause (ccd) of sub-section (2) of section 36 of the Recovery of Debts and Bankruptcy Act, 1993, has notified the Debts Recovery Tribunals and Debts Recovery Appellate Tribunals Electronic Filing (Amendment) Rules, 2021, which amend the Debts Recovery Tribunal and Debts Recovery Appellate Tribunals Electronic Filing Rules, 2020.
The proviso “Provided that e-filing of a pleading shall be mandatory where the debt to be recovered, as mentioned in the application, is rupees one hundred crores and above” shall be inserted in sub-rule(2) of rule 3 of the Debts Recovery Tribunals and Debts Recovery Appellate Tribunals Electronic Filing Rules, 2020.
A party must file a physical copy of a petition or document within seven working days after filing it electronically, together with an acknowledgment of e-filing, and the e-filing date will be used as the date of submission. The goal is to assist tribunals in making the transition to an electronic mode of operation, which has accelerated during the pandemic. Under the previous standards, parties seeking debt collection orders had the option of filing electronically.