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Mumbai March 15 The Reserve Bank of India has asked banks not to sanction loans for acquisition of or investments in small savings instruments, including Kisan Vikas Patras (KVP), as these loans do not confirm to the objectives of small savings scheme.

"The grant of loans for acquiring or investing in KVPs does not promote fresh savings and, rather, channelises the existing savings in the form of bank deposits to small savings instruments and thereby defeats the very purpose of such schemes," said an RBI notification.

According to the notification, in certain instances, banks had sanctioned loans to individuals (mostly high net worth individuals) for acquisition of KVPs.

More Stories on : RBI & Other Central Banks | Small Savings | Credit Market

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