Home › Circulars › RBI/2008-09/78

Master Circular: Statutory & Other Restrictions on Loans and Advances

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2008-09/78 · issued 01 Jul 2008 · ~2 min read
Quick answerRBI consolidated all existing instructions on statutory and regulatory restrictions for loans and advances into a single Master Circular, effective July 1, 2008. It covers prohibitions on lending against bank's own shares, to directors, and for buy-backs, plus regulatory curbs on related-party loans, sensitive commodities, and real estate.

What changed

This Master Circular updates the previous July 2007 version by incorporating all instructions issued up to June 30, 2008. It consolidates multiple circulars into one document for easier reference. The structure and key restrictions remain largely unchanged, but the circular now reflects the latest regulatory positions.

What it means for you

Banks must ensure their lending policies align with the updated restrictions, especially on advances to directors, relatives, and for share-related activities. The circular reinforces existing prohibitions and regulatory limits, reducing ambiguity. Compliance with these consolidated guidelines is mandatory for all scheduled commercial banks except RRBs.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

All Scheduled Commercial Banks (excluding RRBs), Credit and compliance departments, Board of directors and senior management, Loan officers handling retail, corporate, and real estate advances

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Does this Master Circular introduce any new restrictions?

No, it consolidates existing instructions issued up to June 30, 2008, without adding new restrictions. It updates the previous July 2007 circular.

Are Regional Rural Banks (RRBs) covered by this circular?

No, the circular explicitly excludes RRBs. It applies only to all other Scheduled Commercial Banks.

What are the key statutory restrictions highlighted?

Key statutory restrictions include prohibitions on advances against the bank's own shares, loans to directors, and credit for buy-back of securities by companies.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #2169: DBOD No.Dir.BC.17/13.03.00/2008-09 — "Master Circular - Loans and Advances - Statutory and Other Restrictions" dated July 1, 2008”
📜 Read the original circular — full text as issued by RBI
RBI/2008-09/78 DBOD No. Dir. BC. 17/13.03.00/2008-09 July 1, 2008 All Scheduled Commercial Banks (excluding RRBs) Dear Sir Master Circular- Loans and Advances – Statutory and Other Restrictions Please refer to the Master Circular  DBOD. No. Dir. BC. 9/13.03.00/2006-07 dated July 2, 2007  consolidating the instructions/guidelines issued to banks till June 30, 2007 relating to statutory and other restrictions on Loans and Advances. The Master Circular has been suitably updated by incorporating the instructions issued up to June 30, 2008 and has been placed on the RBI website ( http://www.rbi.org.in ). A copy of the  Master Circular  is enclosed. Yours faithfully (P. Vijaya Bhaskar) Chief General Manager CONTENTS Para  No
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/78 · issued 01 Jul 2008. The plain-English explanation above is BankPulse’s own independent summary.
🧰 Tools — save, print, templates & related
Most relevant forCompliance TeamSenior Management / BoardCredit Manager / UnderwritingLoan Operations / CPC / DisbursementLegal / Documentation & Recovery-LegalInternal Audit
🛠 Banker’s toolkit — checklists & reply templates →
Related circulars · Department of Regulation
SFB Pillar 3 Disclosure Norms Aligned with BaselUCB Deposit Rate Disclosure & Uniformity Rules UpdatedLAB Deposit Rate Disclosure & Uniformity Rules TightenedPayments Banks: Interest Rates Must Match Disclosed ScheduleRBI Updates Bulk Deposit Rate Rules and Disclosure Timing
Browse all departments →

💬 Banker Discussion

Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.

Loading comments…
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4346&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
—