Bank Finance to assist employees to buy shares of their own companies
(i) Banks may extend finance to employees for purchasing shares of their own companies under Employees Stock Option Plan (ESOP)/ reserved by way of employees’ quota under IPO to the extent of 90% of the purchase price of the shares or Rs. 20.00 lakh, whichever is lower. Banks are not allowed to extend advances including advances to their employees/ Employees’ Trusts set up by them for the purpose of purchasing their own banks’ share under ESOPs/IPOs or from the secondary market irrespective of whether the advances are secured or unsecured. Follow – on Public Offers (FPOs) will also be included under IPO.
(ii) Banks should obtain declaration from the borrower indicating the details of the loan/advances availed against shares and other securities specified above, from any other bank/s in order to ensure compliance with the ceilings prescribed for the purpose.