Mumbai, Nov 27 (KNN)  The Reserve Bank of India has permitted banks to extend loans to individuals against long-term bonds issued by them for financing of infrastructure and affordable housing.

“In order to provide liquidity to retail investors in such bonds, it has been decided that banks can extend loans to individuals against long-term bonds issued by them…,” the apex bank said in a notification today.

However, boards of the banks should lay down a policy in this regard prescribing suitable margins, purpose of the loan and other safeguards, it said.

Further, such loans should be subject to a ceiling, say, Rs.10 lakh per borrower, and tenure of loan should be within the maturity period of the bonds.   

It also clarified that banks are not permitted to lend against such bonds issued by other banks.  (KNN/ES)