Source: Reserve Bank of India · RBI/2012-13/79 · issued 02 Jul 2012 · ~2 min read
Quick answerRBI consolidated all statutory and regulatory restrictions on loans and advances as of June 30, 2012. This master circular covers prohibitions on lending against own shares, to directors, and sector-specific caps. Banks must align credit policies with these updated rules.
What changed
RBI replaced the July 2011 master circular with an updated version incorporating instructions issued up to June 30, 2012. The circular consolidates all existing statutory and regulatory restrictions on loans and advances into a single reference document. No new policy changes were introduced; it is a compilation of previously issued guidelines.
What it means for you
Banks now have a single, updated reference for all lending restrictions, reducing compliance ambiguity. The circular reinforces prohibitions on advances against own shares, to directors, and for buy-backs, as well as sector-specific caps on real estate, gold, and sensitive commodities. Lenders must ensure their credit policies and loan approvals strictly adhere to these consolidated rules to avoid regulatory action.
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
Review and update internal credit policy manuals to align with the consolidated restrictions in this master circular.
Train credit and compliance teams on the updated list of prohibited and restricted advances, especially those related to directors, officers, and sensitive sectors.
Ensure loan sanction processes include checks against the statutory restrictions (e.g., advances against own shares, to directors) and regulatory caps (e.g., on real estate, gold loans).
Maintain documentation to demonstrate compliance with the master circular for RBI inspections.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Credit and compliance departments, Loan officers and relationship managers, Internal audit teams
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
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 all existing instructions issued up to June 30, 2012. Banks should refer to it as a single source for all statutory and regulatory restrictions on loans and advances.
Which loans are statutorily prohibited under this circular?
Key prohibitions include advances against a bank's own shares, loans to directors of the bank, and credit for buy-back of securities. The circular also restricts lending to relatives of directors and officers.
Are there sector-specific lending caps in this circular?
Yes, it includes restrictions on advances against sensitive commodities under Selective Credit Control, limits on real estate exposure, and guidelines for gold loans and loans against shares.
📜 This document’s life story (2 recorded events, each backed by RBI’s own words)
RBI’s words: “Please refer to the Master Circular DBOD.No.Dir.BC.4/13.03.00/2012-13 dated July 2, 2012 consolidating the instructions/guidelines”
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1286: DBOD.No.Dir.BC.4/13.03.00/2012-13 — "Master Circular - Loans and Advances - Statutory and Other Restrictions" dated July 2, 2012”
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/79
DBOD.No.Dir.BC.4/13.03.00/2012-13
July 2, 2012
Ashadha 11, 1934 (Saka)
All Scheduled Commercial Banks
(excluding RRBs)
Dear Sir / Madam
Master Circular- Loans and Advances – Statutory and Other Restrictions
Please refer to the Master Circular DBOD. No. Dir. BC. 6/13.03.00/2010-11 dated July 1, 2011 consolidating the instructions/guidelines issued to banks till June 30, 2011 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, 2012 and has been placed on the RBI website ( http://www.rbi.org.in ). A copy of the Master Circular is enclosed.
Yours faithfully
(Sudha Damodar)
Chief General Manager
Encl: as above
CONTENTS
Para No
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/79 · issued 02 Jul 2012. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 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=7380&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.
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