RBI relaxes UCB lending norms

The Reserve Bank of India (RBI) has allowed urban cooperative banks (UCB) to grant loans to its directors and relatives against the fixed deposits and life insurance policies standing in their own name (borrowers).

RBI had put restrictions on loans to directors and relatives (in 2003) after the Joint Parliamentary Committee investigating stock market scam of 2001 recommended ban on such loan to avoid irregularities.

In 2005, the central bank had relaxed restrictions some advances such as loans to staff directors, normal loan to directors of salary earners' banks and employee-related advances to managing directors of multi-state co-operative banks.