RBI asks NBFCs to strictly follow Rs 20,000 Cash Loan Limit as per Income Tax

The Reserve Bank of India (RBI) has told non-bank finance companies (NBFC) to follow the IT Act strictly for cash payouts. This means NBFCs must stick to cap of Rs 20,000 while disbursing cash loans.

Form Reuter reports a move that is likely to stop large payouts to those borrowing against cash transactions.

“Please refer to provisions of Sections 269SS of Income Tax Act, 1961, in the section state that individuals cannot receive more than Rs 20,000 as a loan amount in cash “the letter read.

“Consequently, no NBFC should disburse loan amount in excess of Rs 20,000 in cash”

According to another report by CNBC-TV18, the letter sent aftermath to action against non-bank lender IIFL Finance, which will found violation of several rules, including those on disbursal and collection of loan in cash.

The Reserve Bank of India (RBI) did not immediately reply to an email seeking comments.