Section 42, The Banking Act, 2019

(1) A bank or financial holding company shall not - (a) grant or permit to be outstanding a credit exposure to insiders and their related interests except on terms which are nonpreferential in all respects including credit worthiness, interest rate and the value of the collateral; (b) take a credit exposure in respect of insider and their related interests if the aggregate of all credit exposures to the insider and its related interests would exceed 10% of the net own funds of the bank or financial holding company; and (c) take credit exposures in respect of insiders and their related interests if the aggregate of all such credit exposures would exceed 20% of the net own funds of the bank or financial Exposure limits on a consolidated basis. on transactions with an affiliate. Restriction on purchase or transfer of certain assets from affiliates and insiders. on interinstitutional placements. on exposures to insiders and their related interests. No. 6 The Banking Act 2019No. 6 The Banking Act 201964 65 (2) An unsecured credit exposure to insiders and its related interests shall not exceed 5% of the net own funds of the bank or financial holding company. (3) Subject to subsection (7) of section 37 a credit exposure shall not be considered as secured unless it is adequately secured by collateral having a market value of at least 120% of the outstanding amount of the credit exposure throughout its term. (4) The Board of directors of the bank or financial holding company shall be the only authority to approve or sanction any credit exposures of the bank or financial holding company to any insider or their related interests. (5) When calculating capital adequacy, credit exposures that are in excess of the limits of this section shall be deducted from capital. (6) A bank or financial holding company who contravenes this section is liable to an administrative penalty.