Section 37A(1) in The National Bank For Agriculture And Rural Development (Amendment) Act ,2000
(1)The National Bank shall not make any loans or advances under section 30 or make any grants under this Act to any person or body of persons of which any of the directors of the National Bank is a proprietor, partner, director, manager, agent, employee or guarantor or in which one or more directors of the National Bank together hold substantial interest: Provided that this sub- section shall not apply to any borrower if any director of the National Bank-(a)is nominated as director of the Board of such borrower by the Government or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956 ) or by a corporation established by any other law;(b)is elected on the Board of such borrower by virtue of shares held in the borrower organisation by the Government, or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956 ) or by a corporation establised by any other law, by reason only of such nomination or election, as the case may be.Explanation.- For the purposes of this sub- section," substantial interest", in relation to a borrower, means the beneficial interest held by one or more of the directors of the National Bank or by any relative of such director as defined in clause (41) of section 2 of the Companies Act, 1956 (1 of 1956 ), whether sinly or taken together, in the shares of the borrower, the aggregate amount paid- up on whichh either exceeds five lakhs of rupees or five per cent. of the paid- up share capital of the borrower, whichever is lesser.
