Finance minister Nirmala Sitharaman on Tuesday informed Parliament that the Centre has issued no specific directions to banks asking them not to give loans to "sensitive customers" like police personnel.
Ms Sitharaman, during Question Hour in the Rajya Sabha, said there is no "official stated policy" directing banks not to give loans to certain categories of customers.
"Banks make assessments based on KYC and other ratings like civil ratings. I don't think any specific instructions are given to banks - please be careful not to lend to these people," she said in the Upper House while responding to a supplementary queries.
However, banks do exercise a certain level of discretion based on their available KYC (know your customer), she added.
Minister of state for finance Bhagwat Kishanrao Karad said banks do have "problems" in lending to police and politicians. Banks see track record before lending to these customers, he added.
Responding to another question on banks not lending to politically exposed persons (PEPs), Ms Sitharaman said, "...this is more from the point of view of large sums of money are transferred from one account to another complying with the global requirement where the financial action on terror funding happens."
So according to them, the minister said every account will have to be kept on a tab where huge money is transferred to a sensitive bank account, she added.