960102
STATE BANK CIRCULARS RELATING TO NBFI's
NBFls Circular No. 1
dated the 2nd January 1996
Rules of Business for NBFI's — Amendment to
Please refer to Rule 13 of the NBFI Rules (as amended). It has since been decided that for the existing Rule 13(i) and 13(ii), the following shall be substituted with immediate effect-
13(i) No NBFI shall allow facilities to any of its directors or to individuals, firms or companies in which it or any of its directors is interested as partner, director or guarantor, as the case may be, its Chief Executive and its shareholders holding 5 (Five) per cent or more of the share capital of the NBFI, including their spouses, parents, and children or to firms and companies in which they are interested as partners, directors or shareholders holding 5 (Five) per cent or more of the share capital of that concern without the approval of the majority of the directors of that NBFI excluding the director concerned.
13(ii) (a) No NBFI shall allow unsecured facilities or facilities secured only by guarantees. Facilities provided against bank guarantees, the end use of which will be verified by the NBFI to be productive will be exempt.
13(ii) (b) No NBFI shall grant unsecured facilities to or allow facilities on the guarantee of:
(i) any of its directors;
(ii) any of the family members of any of its directors;
(iii) any firm or private company in which the NBFI or any of the persons referred to in (i) or (ii) is interested as director, proprietor or partner; or
(iv) any public limited company in which the NBFI or any of the persons as aforesaid is substantially interested; and
(v) its Chief Executive and its shareholders holding 5 (Five) per cent or more of the share capital of the NBFI, including their spouses, parents, and children or to firms and companies in which they are interested as partners, directors or shareholders holding 5 (Five) per cent or more of the share capital of that concern.
