Guidelines framed by Reserve Bank for bank loans obtained against personal guarantee of directors of companies

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..... r letter issued to scheduled commercial banks and term lending institutions, the Reserve Bank of India has pointed out that with the gradual rise of an entrepreneurial class in the place of the managing agency system and the professionalisation of managerial cadres and the improvements in the techniques of financial and technical appraisal of proposals for assistance, there is no longer need for t .....

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..... narily, in the case of public limited companies, when the lending institutions are satisfied about the management, its stake in the concern, economic viability of the proposal and the financial position of the company, no personal guarantee of the directors need be insisted upon. In fact, in the case of widely owned public limited companies, which may be rated as first class and satisfying the abo .....

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..... e with the knowledge of the lending institutions, - Public limited companies other than those which may be rated as first class, where the advance is on an unsecured basis, - Public limited companies whose financial position is not satisfactory even though the relevant advance may be secured, - In the case of subsidiaries whose own financial position is not considered satisfactory, and .....

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