Cash loan

If the Company is not a closely held company and it gives loan to directors, it will attract provision of Sec 2(22)(e) and such loan will be deemed dividend in the hands of directors and he has to pay tax.

There is no ban on giving loan in cash exceeding Rs. 20,000 but Sec 269SS provides that no person shall accept the loan in cash of more than Rs. 20,000 (In aggregate) in a financial years.

Hence, a penalty of a sum equal to the amount of loan u/s 271D will be imposed on employee and directors for non-compliance of provisions of Sec 269SS.

yes but you can not give interest free loan