Br act

Querist : Anonymous (Querist) 25 November 2011 This query is : Resolved
Applicability of sec 20 of the BR Act on holding companies of banks

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Raj Kumar Makkad (Expert) 25 November 2011
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M/s. Y-not legal services (Expert) 27 November 2011
make clear in your query..

prabhakar singh (Expert) 27 November 2011
Do you mean Banking regulation Act by BR Act??

Section 20 okay!But what are the facts????

Rajeev Kumar (Expert) 27 November 2011
Vague query. Clear it

Querist : Anonymous (Querist) 27 November 2011
Sec 20 of the Banking Regulation act says that no banking company shall enter into any commitment for granting any loan or advance to or on behalf of--
any company (not being a subsidiary of the banking company or a company registered under section 25 of the Companies Act, 1956 (1 of 1956 ), or a Govern- ment company) of which[, or the subsidiary or the holding compnay of which] any of the directors of the banking company is a director, managing agent, manager, employee or guarantor or in which he holds substantial interest,

In one case, an indian individual is appointed as director of foregn holding company which has a bank as subsidiary. This subsidiary bank has granted loan to companies where the said director of bank is a director.

as per the present regulation,foreign bank is prohibited to grant loans to companies where its director has any interest but the question here is will it apply to the holding companies as holding companies are not covered under regulations.

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