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Fair Practice Code for Lenders

As directed by the Reserve Bank of India, from time to time through its circulars, the Bank has adopted modified Fair Practice Code for Lenders as approved by the Board of Directors. The salient features of the same are:

Applications for Loan
In the loan application form, the Bank shall provide comprehensive information including information about fees and charges if any payable for processing and amount of such fees refundable in case of non acceptance of application, prepayment options and other matter which affects the interest of the borrowers, of all categories of loans, irrespective of the amount of loan sought by them.

Processing
  • The Bank shall provide acknowledgement for receipt of all loan applications indicating the time frame within which the application will be disposed of.
  • The Bank shall verify the loan application and if additional details / documents are required, these will be sought from the applicant.
  • For all categories of loans and irrespective of any threshold limits, the Bank will be expected to process the application without delay. In case the application is turned down, the Bank will convey in writing to the applicant the reasons for rejection within one month.

Loan Appraisal and Terms and Conditions
  • The sanctioning authority will be expected to ensure proper assessment of the credit application as per the extant instructions and credit policy of the bank. The availability of adequate margin and security will not be a substitute for due diligence on the creditworthiness of the customer.
  • All the terms and conditions and other caveats will be duly communicated by an authorized official of the Bank to the customer in writing.
  • The acceptance of the customer will be obtained on the sanction letter with the customer's signature under the caption "I/WE ACCEPT ALL THE TERMS AND CONDITIONS WHICH HAVE BEEN READ AND UNDERSTOOD BY ME/US".
  • A copy of the loan agreement along with all the enclosures quoted in the loan agreement will be furnished to the customer at the time of issue of the sanction letter.
  • The sanction letter / loan agreement will clearly state that the credit facilities will be extended solely at the discretion of the Bank and that drawings under the following circumstances will be solely at the discretion of the Bank.
  • Drawings beyond the drawing power / sanctioned limits.
  • Honouring of cheques issued for the purpose other than specifically stipulated in the sanction.
  • Drawings in an account once it is classified as NPA.
  • No drawings will be allowed in case of non-compliance of the terms and conditions by the borrower.
  • Meeting further requirements of the borrower on account of growth in business will be subject to proper review of the credit limits.

Disbursement of loans including changes in terms & conditions
  • The disbursement will be done immediately on compliance of all the terms and conditions of the sanction by the borrower and the branches need not refer to the sanctioning authority for disbursement.
  • Any changes in the terms and conditions of the sanction such as interest and charges will be notified to the borrower before effecting the changes.
  • Any changes in interest rate and charges will be effected only prospectively after giving due notice to the borrower.

Post disbursement supervision
  • The post disbursement supervision, such as submission of periodical reports and periodic inspection, will be stipulated at the time of issue of the sanction letter. The sanction letter would also mention whether the Bank or the borrower will bear the cost of inspection.
  • The Bank will issue notices to the borrowers in advance in case the Bank decides to recall the advance / accelerate the payment / accelerate the performance under the loan agreement. Or seek additional securities.
  • The Bank shall release all securities on receiving payment of loan. However, the Bank may decide to exercise the right to set off any legitimate right or lien for any other claim against borrower. In case the Bank decides to retain the security, the borrower will be notified about the remaining claims and the documents under which the Bank is entitled to retain the security till the relevant claim is paid / settled.

Others
  • The Bank will not interference in the affairs of the borrowers except where provided for in the terms and conditions of the loan sanction documents, such as periodic inspection, scrutiny of books of accounts, verification of stocks and book debts, and scrutiny of QIS statements.
  • In case any information not disclosed earlier by the borrower has come to the notice of the Bank, the Bank will have the right to elicit the necessary information from the borrower and initiate action to protect its interest.
  • While, the Bank may participate in credit-linked schemes framed for weaker sections of the society, the Bank shall not discriminate on grounds of sex, caste and religion in the matter of lending.
  • In the matter of recovery of loans, the Bank shall not resort to undue harassment such as persistently bothering the borrowers at odd hours and use of muscle power.
  • In the case of receipt of request for transfer of borrowal account, either from the borrower or from other banks / FIs which propose to take over the loan, the Banks' consent or objection, if any, shall be conveyed within 21 days from the date of receipt of request.

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