Describe the Restriction on Loans and Advances to Directors and Related Parties Under Bank Company Act, 1991 and RRPD Circular No-3/2025

Restrictions as per the Bank Company Act 1991 and BRPD Circular No: 03/2025

(a) A bank cannot grant more than 10% of its tier-1 capital to the directors or related parties. If the credit limit crosses 10%, then prior approval from Bangladesh Bank is required.

(b) Prior approval from Bangladesh Bank should be taken for a direct loan of 50 lakh and a total loan (direct+indirect) of 1 crore taka.

(c) The loan to the directors and related parties should be secured with adequate collateral (land, building, gold, FDR, etc.). A director’s own share in the bank cannot be treated as collateral.

 

 

This platform aims at supporting bankers for JAIBB & AIBB Exam preparation. Read the contents regularly & don't forget to share with your colleagues.