(Reuters) -The Reserve Bank of India on Friday released a draft framework aimed at simplifying norms for lending by regulated entities to their related parties, requiring board or designated‑committee approval only for loans above set thresholds.
Under the proposed framework, commercial banks with assets below 1 trillion rupees will not require board approval for loans up to 50 million rupees to related parties, the central bank said.
For banks with assets between 1 trillion and 10 trillion rupees, the threshold is 100 million rupees, while those with assets exceeding 10 trillion rupees can extend related-party loans up to 500 million rupees without needing board clearance.
The draft also proposed that independent directors of other banks will not be classified as related parties and will not be subject to these rules.
The RBI has also suggested enhanced supervisory reporting and disclosure requirements for all transactions between regulated entities and their related parties, in a bid to bolster transparency and oversight.
The central bank said the directions aim to create a “harmonised, principle-based framework” for lending to related parties, while rationalising the existing regulations.
(Reporting by Nishit Navin; Editing by Vijay Kishore)
