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FAIR PRACTICES CODE FOR LENDERS

3. 4.

Fair Practices Code for LOANS and ADVANCES 1. Before we lend you any money or increase your overdraft, credit card limit or other borrowing, we will assess whether we feel you will be able to repay it. If we offer you an overdraft, or an increase in your existing overdraft limit, we will tell you if your overdraft is repayable on demand or otherwise. Wherever possible, reasons for rejection of loans will be conveyed to you.

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1. Applications for Loans & their processing

KYC Compliant a. All the loan application forms of the Bank shall, inter alia, contain the following additional information :I. II. III. Amount of processing fees/charges, Amount of processing fees refundable in case of non-acceptance of applications, Refund of entire processing fees if the application is not processed within a cut off date from the date of receiving all the information/particulars about the proposal. Pre-payment fees

IV.

b. At the time of receipt of all loan applications, the Manager of the Bank shall give an acknowledgement to the receipt of the application with date & seal of the Bank. Along with such receipt the time frame with which the loan proposal shall be disposed off should also be indicated as contained in the Lending Policy of the Bank. c. The loan applications so received shall be verified within stipulated time as contained in the Lending Policy of the Bank and requirement of additional document/details/particulars, if any, must be communicated to the applicant/borrower immediately. d. In case where loan applications are rejected, the main reason/reasons which, in the opinion of the Bank after due consideration, have led to such rejection should be communicated to applicant in writing within the time frame as contained in the Lending Policy of the Bank. 2. Loan Appraisal and terms/conditions a. It shall be ensured that each credit application is processed/appraised as per the guidelines laid down in the Lending Policy of the Bank. Margin and security stipulation shall not be used as a substitute for due diligence on credit worthiness of the borrower. After due consideration and appraisal, the credit limit along with the terms and conditions thereof shall be conveyed in writing (in duplicate) to the borrower, by the branch which received the loan application. One copy of such communications shall be returned by the borrower duly signed as a token of its acceptance of these terms & conditions. Such terms and conditions and other caveats governing credit facility sanctioned by the Bank shall be mutually arrived at after negotiation by the Bank with the borrower. A copy of loan agreement (wherever applicable) along with a copy each of all enclosure quoted in the loan agreement should be furnished to the borrower. The terms and conditions of the sanction shall be comprehensive and clearly stipulate the credit facilities that are solely at the discretion of the Bank. It will, inter alia, include approval or disallowance of facilities such as drawings beyond the drawing power/sanctioned limits, honouring of cheques issued for the purpose other than specifically agreed to in the credit sanction, disallowance of drawings on the event of a/c. becoming non-performing or on account of noncompliance with the terms of sanction. The terms

b.

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& conditions shall also state specifically that, the bank is not having any obligation to meet further requirement of the borrower on account of growth in business etc. without proper review of the credit limits. Credit proposals received from borrowers under consortium arrangement shall be dealt with in accordance with the guidelines as stated in the Lending Policy of the Bank.

3. Disbursement of Loans including changes in terms & conditions. a. Upon compliance with the stipulated terms and conditions by the borrower the Bank shall ensure timely disbursement of loans in conformity with the disbursement schedule stated under the terms and conditions governing such sanction. Due notice of any change in the terms & conditions including change in interest rates & service charges is to be given to the borrower by the bank as and when such changes are given effect. Such notice may be displayed in the Banks Notice Board for information of the borrowers, if sending individual intimation is not found feasible in branches having large number of borrowal accounts It is to be ensured that changes in interest rates and other charges, if any, are effected only prospectively. However, in case of large borrowers (where interest rate is fixed based on its credit risk rating) change in interest rates due to deterioration of Credit Risk Rating arising out of delayed submission of financial statements, higher interest rate may be fixed with retrospective effect.

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4. Post disbursement Supervision. a. With a view to ensuring proper end use of funds and borrowers adherence to the stipulated terms and conditions of the loan, the Bank shall continue to exercise post-disbursement follow up & supervision by way of periodic inspection of assets, obtaining periodic reports & returns, undertaking review of the account at stipulated intervals etc. The Bank shall however, maintain a positive & constructive approach all through in order to ensure that such follow up & supervision duly takes care of banks credit related genuine problem of the borrowers. Before taking a decision to recall of the advance / or for accelerated repayment of the loan or even for seeking additional securities (beyond the securities terms) the Bank shall give due notice to the borrower as stipulated under the sanctioned terms & conditions/loan agreement. In case the terms of sanction/loan agreement does not stipulate any such specific notice period, normally a period of one to two months shall be considered reasonable. The securities held by the Bank against a loan allowed to the borrower shall be released after full settlement of the loans dues subject to any legitimate right or lien on the same securities for any other claim of the Bank against such

b.

c.

borrower. In cases warranting exercise of such right to set off, the Bank shall give due notice as per the terms of sanction/loan agreement about the same to the borrower with full particulars of the remaining claims and the documents under which the Bank is entitled to retain the securities till the relevant claim is settled/paid. Where there is no such stipulation in the Terms of Sanction/Loan agreement a 15 to 21 days notice is counted reasonable. 5. General a. Bank shall refrain itself from interfering in the affairs of the borrowers except for what is provided in the terms and conditions of sanctions/loan agreement unless new information either on the borrower or his business which was not declared by the borrower at the time of sanction comes to the notice of the Bank. The Bank may seek clarification on any such issues revealed latter and are considered prejudicial to the interest of the bank in realisation of the loan dues. The Bank shall not discriminate on the ground of sex, caste and religion in the matter of lending. However, any particular product designed for a specific target group or any benefit/incentive offer by the bank to attract a certain target group within the ambit of a special scheme shall be out of the purview of above. Moreover, the issue of discrimination shall not be a bar in the Banks participation in poverty alleviation schemes framed for weaker section of the society. The bank should not resort to any undue harassment on the borrowers by continuously bothering them at odd hours or by using muscle power for recovery of its loan dues etc. However, initiation of routine recovery measures within the ambit of recovery policy of the Bank shall be exception to this clause. In case request for transfer of borrowal account either from borrower or from other bank or FI proposing to take over the loan, the Bank shall convey its consent or otherwise i.e. objection of the Bank, if any, within 21 days from the receipt of the request.

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6. Grievance Redressal All disputes/grievances arising out of lending decisions shall be settled within the organization. Besides, the system of redressal of customer grievances received by way of complaints or otherwise the existing practice of resolution of disputes/grievances (arising out of lending decisions) by the authority at one stage higher level shall continue.

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