Section 20: Restrictions on loans and advances.

Q: What does Section 20 of The Banking Regulation Act, 1949 (BR Act) deal with?

Section 20 BR Act pertains to "Restrictions on loans and advances.". It is part of the The Banking Regulation Act, 1949, a legislation enacted by the Parliament of India. Section 20 of The Banking Regulation Act, 1949 (BR Act) governs restrictions on loans and advances. As verified on 22 May 2026.

Q: Is Section 20 BR Act still in force?

Yes, Section 20 of the The Banking Regulation Act, 1949 is currently in force across the Republic of India.

Q: What is धारा 20 BR Act?

धारा 20 BR Act is the Devanagari Hindi reference for Section 20 of the The Banking Regulation Act, 1949. Section 20 of The Banking Regulation Act, 1949 (BR Act) governs restrictions on loans and advances. As verified on 22 May 2026.

Q: What is Dhara 20 BR Act?

Dhara 20 BR Act is the Roman Hindi reference for Section 20 of the The Banking Regulation Act, 1949. "Dhara" means "Section" in Hindi. Section 20 of The Banking Regulation Act, 1949 (BR Act) governs restrictions on loans and advances. As verified on 22 May 2026.

Q: How to cite Section 20 of The Banking Regulation Act, 1949?

Cite as: "Section 20, The Banking Regulation Act, 1949 (BR Act)" in legal briefs. For academic writing, use the BlueBook format: The Banking Regulation Act, 1949, 1949, § 20 (India).

Law on Tips Editorial Board

1[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,—

(2) Where any loan or advance granted by a banking company is such that a commitment for granting it could not have been made if clause (b) of sub-section (1) had been in force on the date on which the loan or advance was made, or is granted by a banking company after the commencement of section 5 of the Banking Laws (Amendment) Act, 1968 (58 of 1968), but in pursuance of a commitment entered into before such commencement, steps shall be taken to recover the amounts due to the banking company on account of the loan or advance together with interest, if any, due thereon within the period stipulated at the time of the grant of the loan or advance, or where no such period has been stipulated, before the expiry of one year from the commencement of the said section 5:

Provided that the Reserve Bank may, in any case, on an application in writing made to it by the banking company in this behalf, extend the period for the recovery of the loan or advance until such date, not being a date beyond the period of three years from the commencement of the said section 5, and subject to such terms and conditions, as the Reserve Bank may deem fit:

Provided further that this sub-section shall not apply if and when the director concerned vacates the office of the director of the banking company, whether by death, retirement, resignation or otherwise.

(3) No loan or advance, referred to in sub-section (2), or any part thereof shall be remitted without the previous approval of the Reserve Bank, and any remission without such approval shall be void and of no effect.

(4) Where any loan or advance referred to in sub-section (2), payable by any person, has not been repaid to the banking company within the period specified in that sub-section, then, such person shall, if he is a director of such banking company on the date of the expiry of the said period, be deemed to have vacated his office as such on the said date.

Explanation.—In this section—

(5) If any question arises whether any transaction is a loan or advance for the purposes of this section, it shall be referred to the Reserve Bank, whose decision thereon shall be final.]1. Subs. by Act 58 of 1968, s. 5, for section 20 (w.e.f. 1-2-1969). 2. Ins. by Act 1 of 1984, s. 23 (w.e.f. 15-2-1984).