Lawfarm Team
Asked May 06, 2016

RBI norms about Directors and Ex Directors of Cooperative Banks

  • 2 Answers

Can you explain the RBI norms about Directors and Ex Directors of Cooperative Banks not allowed to settle NPAs through OTS?

Answers 2

As you can read from the RBI notification here, at Clause c of Section (A)1, Loans availed of or guaranteed by ex-Directors of respective Urban Co-operative Banks are NOT covered by the OTS scheme. Thus, if you are an ex director of a cooperative bank and you have an NPA account, your only option is to repay all dues.  In order to ease your burden, you may see if your bank has a restructuring option for loans. Generally banks have the option, but it differs from bank to bank. Under this, the bank may agree to extend your time to repay them. However, if such an option is not available, you have no choice but to repay your dues within the time period as stipulated by the Bank.
Agree Comment 0 Agrees over 5 years ago

Under Section 20, banks are not allowed to give loans to its directors.   Even if they have done so, Under Section 20A, a Bank is not allowed to remit any loan or part of any loan, except with the prior approval of the Reserve Bank. Any such remission shall be void and of no effect.
Agree Comment 0 Agrees over 5 years ago
  • Default avatar
    Sameer Bhingarkar
    Directors or ex directors are eligible to get the benefit of one time settlement subject to prior approval of RBI. You can submit your application for OTS to the said Bank. As per circular of State cooperative department (GR), after scrutinizing your application the bank will send the proposal to RBI for permission. RBI will confirm that it is not bias, or that you haven't taken loan using your influence and now take remission through OTS, or that you have resigned the directorship for taking loan. The chances are more to get remission of OTS to you. After getting permission from RBI, Your bank will calculate the amount as per circular of cooperative division and send you details of payment.
    Agree 0 Agrees over 3 years ago

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