- Short title and recital
The code set out below adopted by Banks in pursuance of the directions contained in Reserve Bank of India Circular No. DBOD Leg.No. BC.104/09.07.007/2002-03 dated 05.05.2003 shall be called the Fair Practices Code for Lenders Adopted by Banks (hereinafter referred to as “the Code”)
- Applications for Loans and their processing
(a) Fees / Charges
Loan application forms applicable to all categories of borrowers irrespective of loan amount, will hence forth contain information about the fees/ charges payable, if any, for processing, the amount of such fees refundable in the case of non-acceptance of application, pre-payment options and any other matter which affects the interest of the borrower, to enable a comparison with other Banks and to facilitate informed decision by the borrower.
Acknowledgement will be issued for receipt of all applications.
(c) Time frame for disposal
For loans up to Rs. 2 lakhs the said acknowledgement will also indicate the time frame within which the loan application up to Rs.2 lakhs will be disposed of the loan applications will be verified within a reasonable period of time and if additional details / documents are required, they will be intimated to the borrowers immediately.
(d) Communication of rejection with reasons
Applicants for all categories of loans irrespective of any threshold limits, including credit card applications, shall be conveyed in writing within the stipulated time, the main reason/ reasons which, in the opinion of the Bank have led to rejection of loan applications in the prescribed format and standard reasons narrated in Cir.No. 112/2003.
- Loan appraisal and terms and conditions
(a) Communication of Sanction
Sanction of the credit limit will be conveyed to the borrower along with the terms and conditions thereof, for which the borrower’s acceptance of the said terms and conditions given with his full knowledge will be obtained and kept on record.
(b) Terms and Conditions of Sanction
The letter of sanction containing the terms and conditions and other caveats governing credit facilities will be issued t o the borrower signed by the authorised official. A copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement will also be furnished to all the borrowers irrespective of loan amount at the time of sanction/disbursement of loans received from the borrower for the same.
(c) Consortium Arrangement
In the case of lending under consortium arrangement, procedures will be evolved by the participating banks/lending agencies, including our Bank, to complete appraisal of proposals in a time bound manner to the extent feasible, and communicate their decisions on financing or otherwise within a reasonable time.
- Disbursement of loans including changes in terms and conditions
Timely disbursement of loans sanctioned in conformity with the terms and conditions governing such sanctions will be ensured. Notice will be given in respect of any change in the terms and conditions including interest rates, service charges etc. For this purpose a notice on the Notice Board of the Bank’s branches and offices shall be deemed to be sufficient notice aside of the notices sent individually. Changes in interest rates and charges will be effected only prospectively.
- Post disbursement supervision
(a) Post disbursement Supervision
Post disbursement supervision particularly in respect of loans upto Rs. 2 lakhs shall be constructive with a view of taking care of any “lender related” genuine difficulty that the borrower may face.
(b) Recall / Accelerated Payment
Decision to recall / accelerate payment or performance under the agreement or seeking additional securities, lenders shall be preceded by notice to borrowers, as specified in the loan agreement or a reasonable period, if no such condition exists in the loan agreement.
(c) Release of facilities
On receiving payment of loan or realization of loan subject to any legitimate right or lien for any other claim against the borrower all securities will normally be released to the borrower. Where right of set off is to be exercised, borrowers will be given notice about the same with full particulars about remaining claims and the documents under which Bank is entitled to retain the securities till the relevant claim is settled / paid.
(a) Non interference
The Bank will not interfere in the affairs of the borrowers except for what is provided in the terms and conditions of the loan sanction documents, unless new information, not earlier disclosed by the borrower, has come to the notice of the Bank.
(b) No Discrimination
The bank will not discriminate on the grounds of sex, caste and religion in the matter of lending. However the Bank may participate in credit-linked schemes framed for weaker sections of society.
(c) No unfair measures for recovery
In keeping with its customer friendly tradition, in the matter of recovery of loans, the Bank will not resort to undue harassment viz., persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans etc.
(d) Issue of No-Objection Certificate
In case of receipt of request for transfer of borrowal account, either from the borrower or from a bank / financial institution, which proposes to take over the account, the consent or otherwise i.e. objection of the Bank, if any, will be conveyed within 21 days from the date of receipt of request.
To be entitled to the above provisions of the code the borrwer shall
(a) Abide by the assessment of credit application carried out by the Bank and shall not expect the use of margin and security stipulations as a substitute for due diligence on credit worthiness of the borrower.
(b) Agree and undertake clearly that the credit facilities extended by the Bank are solely at the discretion of the Bank. These shall include approval or disallowance of facilities, such as, drawings beyond the sanctioned limits, honouring cheques issued for the purpose other than specifically agreed to in the credit sanction, and disallowing drawing on a borrowal account on its classification as a non-performing asset or on account of non-compliance with the terms of sanction. It shall also be specifically understood by the borrower that the Bank does not have an obligation to meet further requirements of the borrower on account of growth in business etc. without proper review of credit limits.