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Home › Indian Laws › Banking Regulation Act, 1949 › Section 20A
Banking Regulation Act, 1949 · Section guide

Section 20A: Restrictions on power to remit debts

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 20A — Restrictions on power to remit debts. Restricts remission of debts due from directors and connected persons unless the statutory approval route. Is followed; a write-off or compromise cannot be treated as an ordinary credit decision when the connected-person rule is engaged.

Official statute linkedProvision-specific anatomyPractical case + evidence file
Official text: DFS consolidated Act

Statutory structure and provision map

This map is a provision-specific explanation, not a substitute for the exact statutory text.

Core statutory rule

Restricts remission of debts due from directors and connected persons unless the statutory approval route is followed.

Condition / limitation

a write-off or compromise cannot be treated as an ordinary credit decision when the connected-person rule is engaged.

Source and effective-date control

Apply the wording of Section 20A that was in force on the event date; use the official Act and any applicable commencement/amending instrument linked on this page.

Professional application

Identify prior approval, covered borrowers/debts and consequence of unauthorised remission.

Evidence / working-paper checklist

  • Section 20A evidence: borrower and connected-party declarations.
  • Section 20A evidence: sanction note and security/interest documentation.
  • Section 20A evidence: board/RBI approval where the provision requires it.
  • Section 20A evidence: credit-policy mapping to any RBI direction issued under sections 21/35A.

Retain the event date and source version with the file so the conclusion remains reproducible after later amendments.

Common mistakes to avoid

  • For Section 20A, avoid testing only the borrower name and not the prohibited relationship or interest.
  • For Section 20A, avoid confusing an RBI policy direction with a discretionary internal credit policy.
  • For Section 20A, avoid remitting/restructuring an exposure without checking statutory board/RBI restrictions.

Related sections inside the Act

Section 19 — Restriction on nature of subsidiary companiesSection 20 — Restrictions on loans and advancesSection 21 — Power of Reserve Bank to control advances by banking companiesSection 21A — Rates of interest charged by banking companies not subject to court scrutiny

Use these links to read Section 20A in its statutory sequence, especially where the provision imports definitions, approvals, appeals, penalties or winding-up consequences from neighbouring sections.

Current-law source control

Source control: Section 20A is anchored to the official DFS consolidated text; later changes require separate Gazette verification.

Dated matters: verify any later Gazette, RBI direction or binding judgment affecting Section 20A on the event date.

Disclaimer

This Finin2min page is an educational and professional reference. Banking regulation is fact-, entity- and date-sensitive. Verify the current Act, Gazette amendments and commencement notifications, applicable RBI Rules/directions and the transaction record before acting or filing.