RBI proposes stricter rules for banks lending to related parties
The Reserve Bank of India (RBI) just dropped a proposal for new rules on how banks lend money to their "related parties"—think companies or people closely tied to the bank.
The idea? Make sure big loans don't slip through without serious checks, especially when there's a risk of favoritism or conflicts of interest.
Loan limits based on bank size
Here's how it would work:
If a bank is massive (over ₹10 lakh crore in assets), any loan above ₹50 crore to related parties needs the board's green light.
For mid-sized banks (₹1-10 lakh crore), that threshold drops to ₹10 crore, and for smaller ones (under ₹1 lakh crore), it's just ₹5 crore.
Why this matters and how to weigh in
RBI says loans to insiders can create real risks—like unfair advantages or decisions that hurt everyone else.
These updated guidelines aim to close loopholes and keep things fairer.
If you've got thoughts, RBI is actually inviting public feedback until October 31, 2025, before making anything final.