Research: Is there upper limit for giving personal loan?

The amount of money that can be lend on personal loans depends upon the monthly income and
credit score of the borrower. There is no upper limit specified in the RBI guidelines and
circulars.

RBI Master Circular- Loans and Advances – Statutory and Other Restrictions dated July 1, 2011
provides that:

Each bank should formulate with the approval of their Board of Directors a Loan Policy
for grant of advances to individuals against shares / debentures / bonds keeping in view
the RBI guidelines. Banks should obtain a declaration from the borrower indicating the
extent of loans availed of by him from other banks as input for credit evaluation. It
would also be necessary to ensure that such accommodation from different banks is not
obtained against shares of a single company or a group of companies. As a prudential
measure, each bank may also consider laying down appropriate aggregate sub-limits of
such advances.

However, the RBI raised the limit of personal loan amount that can be granted by lenders to
directors of other banks and their families at not more than ₹5 crore from ₹25 lakh. RBI also
said that banks should not grant loans and advances aggregating ₹5 crore and above unless
sanctioned by the board of directors or management committee if the loan is being sanctioned to
any relative other than spouse and minor or dependent children of their own chairpersons,
managing director or other directors.

Unless sanctioned by the Board of Directors/ Committee of Directors, NBFCs shall not
grant loans and advances aggregating Rupees five crores and above to - i) their directors
(including the Chairman/ Managing Director) or relatives of directors. ii) any firm in
which any of their directors or their relatives is interested as a partner, manager,
employee or guarantor. iii) any company in which any of their directors, or their
relatives is interested as a major shareholder, director, manager, employee or guarantor.