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Urban co-op banks banned from giving donations to trusts: RBI

The RBI has prohibited UCBs from giving donations to trusts, where the directors and / or their relatives hold position or are interested

August 30, 2013 3:02 IST | India Infoline News Service
The Reserve Bank of India has prohibited urban co-operative banks (UCBs) from giving donations to trusts and institutions, where the directors and / or their relatives hold position or are interested.

This ban applies even if the donation is within the permissible ceiling of 1% of the published profits of the bank for the previous year.

“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,” RBI said in a notification today.

The RBI has imposed this ban as it has been brought to its 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.

According to RBI, the normal donations made by UCBs during a year should be restricted to a ceiling of 1% of the published profits of the bank for the previous year.

Such donations, together with those that may be made to national funds and other funds recognised /sponsored by the Central /State Government, during a year, should not exceed 2% of the published profits of the bank for the previous year.

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