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Donations to Trusts and Institutions where Directors, their relatives hold position or are interested


 Notice Date : 30 August 2013

RBI/2013-14/205
UBD.BPD.(PCB).Cir. No. 7/09.72.000//2013-14

August 30, 2013

The Chief Executive Officer
All Primary (Urban) Co-operative Banks

Dear Sir/Madam,

Donations to Trusts and Institutions where 
Directors, their relatives hold position or are interested

Please refer to our Circular UBD (PCB)/BPD/Cir.43/09.72.00/2004-05 dated April 11, 2005, in terms of which Urban Co-operative Banks (UCBs) were advised that the normal donations to be made during a year should be restricted to a ceiling of 1% of the published profits of the bank for the previous year and such normal donations, together with those that may be made to National Funds and other funds recognized /sponsored by the Central /State Government, during a year, should not exceed 2% of the published profits of the bank for the previous year.

2. It has been brought to our notice that some of the UCBs have made contributions which are in the nature of donations to the Trusts for charitable or benevolent objective or for any exhibition in which the directors or relatives are interested. In view of this, UCBs are, with immediate effect, prohibited from giving donations to Trusts and Institutions, where directors, and/or their relatives hold position or are interested, even within the permissible ceiling of 1% of the published profits of the bank for the previous year.

3. The terms 'relative' and “interest, as used above, shall have the meaning as indicated in the Annex.

Yours faithfully,

(A.K. Bera)
Principal Chief General Manager

Encl: Annex

Annex

Definition of terms "relative" and “interest”

1. “relative”

The ‘relative’ of a director of the bank shall mean any relative of a director of the bank as indicated hereunder:

A person shall be deemed to be relative of another, if and only if, :-

a) they are members of a Hindu Undivided Family; or
b) they are husband and wife; or
c) the one is related to the other in the manner indicated below :

List of relatives

1. Father
2. Mother (including step-mother)
3. Son (including step-son)
4. Son's wife
5. Daughter (including step-daughter)
6. Daughter's husband.
7. Brother (including step-brother)
8. Brother’s wife
9. Sister (including step-sister)
10. Sister’s husband

2. "interest"

Trust in which directors /relatives of directors hold positions as Trustees, or are beneficiaries or involved in any capacity in the working of the trust, which is likely to influence the independence of the director(s).

 

Guest
on 31 August 2013
Notification No : RBI/2013-14/205
Published in Others
Source : ,










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