Apurba Sen
Can the U.C.B sanction O.D /C.C to a proprietorship co. where the wife of the C.E.O of the Bank is the Proprietress. Your valued opinion is solicited, please.
I C Naik
Banking Regulation Act 1949 restricts banking company (which includes UCB) granting loans under Section 20 reproduced below:
20.Restrictions on loans and advances
(1)Notwithstanding anything to the contrary contained in section 77 of the Companies Act, 1956 (1 of 1956), no banking company shall-
(a) grant any loans or advances on the security of its own shares, or
(b) enter into any commitment for granting any loan or advance to or on behalf of-
(i) any of its Directors,
(ii) any firm in which any of its Directors is interested as Partner, Manager, Employee or Guarantor, or
(iii) any company (not being a subsidiary of the banking company or a company registered under section 25 of the Companies Act, 1956 (1 of 1956), or a government company, of which or the subsidiary or the holding company of which any of the Directors of the banking company is a Director, Managing Agent, Manager, Employee or Guarantor or in which he holds substantial interest, or
(iv) any individual in respect of whom any of its Directors is a partner or guarantor?
As one can see Proprietorship co. owned by the wife of the C.E.O of the Bank is not part of the above list. So the answer is yes.