What changed
This is an annual consolidation replacing the July 2, 2012 master circular. It incorporates all instructions issued between July 1, 2012 and June 30, 2013. The structure and key restrictions remain largely unchanged, but the circular now includes updated annexes and references to newer guidelines like those on project finance and gold loans.
What it means for you
Banks must ensure their lending policies comply with the consolidated restrictions, especially on advances to directors, relatives, and against shares or gold. The circular reinforces existing caps and prohibitions, so lenders should review their internal guidelines to avoid regulatory breaches. It also serves as a single reference point for compliance audits.
What you must do
- Update your internal loan policy manual to reference this 2013 master circular as the current standard.
- Train credit officers on the updated restrictions, particularly on advances to directors and against sensitive commodities.
- Review existing loan portfolios for any exposure that may violate the consolidated guidelines, especially on share-backed and real estate advances.
- Ensure all new loan sanctions are checked against the statutory and regulatory restrictions listed in the circular.
Who it affects
All scheduled commercial banks (excluding RRBs), Credit risk and compliance departments, Loan officers sanctioning advances to directors, relatives, or against shares/gold, Banks with exposure to real estate, NBFCs, or sensitive commodities
Does this circular introduce any new restrictions not present in the 2012 version?
No, this is a consolidation of existing instructions. It updates the previous master circular by incorporating guidelines issued up to June 30, 2013, but does not introduce new restrictions on its own.
Are Regional Rural Banks (RRBs) covered by this master circular?
No, the circular explicitly excludes RRBs. It applies only to all scheduled commercial banks.
Where can I find the detailed list of restricted activities?
The circular's table of contents lists 24 specific restrictions under statutory, regulatory, and other categories, including advances against bank's own shares, to directors, and against sensitive commodities. The full text is available on the RBI website.