Please refer to clause (D) of BCD Circular No. 7, of 31st May
1972 reproduced as under:- “No
banking company shall, make advances to a private limited
company without obtaining personal guarantee of the directors
of such company, in addition to the normal security which
the banking company may require.”
It has now been decided that advances made to private limited
companies, owned and controlled by the Government, would be
exempt from the requirement of obtaining personal guarantee
of the nominee directors in addition to normal security as
required under the rules. Where however, the private company
is not controlled by the Government, the requirement of personal
guarantee of nominee directors will be necessary as hithertofore.
Other instructions on the subject shall, however, remain unchanged.
Please acknowledge receipt.
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