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FAIR PRACTICES CODE FOR LENDERS
This circular supercedes guidelines contained in ID circular no. 1548 dated 14.07.2004 and circulatory letter no. 7/2004 dated 31.03.2004. During Inspection of branches it has been observed that branches are not adhering to Fair Practice Code for Lending (FPC) of the Bank and additions made to FPC circulated vide ID circular no. 1548 dated
14.07.2003 and circulatory letter no. 07/2004 dated 31.03.2004 respectively. Some of the deviations pointed out by the inspectors are as under:
- No acknowledgment of loan application is issued by branches.
- Reasons for rejection of application not being intimated to the applicant.
- Copy of loan agreement along with all enclosures not being provided to borrowers.
- The customers are not being informed about procedure involved in servicing and closure of account
- The loan sanction/agreement letter does not clearly stipulate the credit facilities that are at the discretion of the Bank such as allowing drawing beyond sanctioned limits
Further, IBA vide their letter No.OPR/Legal/1965 dated August 27, 2004 have forwarded copy of High Court , Delhi Order dated 29th May 2003, giving guidelines to be followed by the Banks/Financial Companies before exercising their powers to re- possess any asset hypothecated to them which will form part of Fair Practice Code for Lending of the Bank..
Conscious of the fact that parties are governed by a written contract and are bound by the terms of the contract which they have entered into with open eyes, and in view of guidelines framed by the RBI which the High Court Delhi finds are not being followed by all finance companies, the High Court Delhi has issued the following guidelines to be strictly followed by all finance companies before it exercises its powers to re-possess a vehicle :
- Whenever a cheque is not honoured for payment, it would be immediately brought to the notice of the borrower by issuance of a notice under registered post, to be posted at the address provided by the borrower and proof of dispatch by registered post at the given address would be considered as sufficient proof of service of notice.
- 7 days time should be given reckoned from the date of service of the registered notice for clearance of the amount under the dishonoured cheque.
- In case of second dishounour of cheque similar notice be provided drawing the attention of the borrower to the term of the agreement entitling the lender to recall the entire loan. This notice should again give 7 days time to the borrower to pay the outstanding amounts as on date. The 7 days time to be reckoned from the date of service of the notice.
- If the amount is not paid, it would be open to the finance company(bank) to exercise its power under the finance agreement to recall the loan. If it exercise this power another notice be given to the borrower intimating that the loan has been recalled and the borrower should be called upon to tender the amount due within 7 days of receipt of notice. This notice again be sent by registered post at the address given by the borrower.
- If no amount is paid within the stipulated period as per the notice, finance company(bank) would be authorized to repossess the vehicle but this power of repossession would not entitle the finance company to track the vehicle while plying on the road.
- In case the borrower refuses to sign the papers when the car is repossessed, on repossession of the vehicle, immediate information be provided by the finance company(bank) to the local police intimating the time and place when the vehicle was repossessed.
In order that branches comply strictly the Fair Practice Code of the Bank we reiterate guidelines contained in ID circular no. 1548 dated 14.07.2004 and circulatory letter no. 7/2004 dated 31.03.2004 as per Annexure attached.
All branches and controlling offices are advised to adhere to guidelines as above strictly.
(Gajindar Singh)
General Manager(A)
ANNEXURE
FAIR PRACTICES CODE FOR LENDERS
RBI broad guidelines(in bold letters) and the Bank's Fair Practices Code are as under:
APPLICATIONS FOR LOANS AND THEIR PROCESSING
(a) Loan Application forms in respect of priority sector advances upto Rs. 2.00 lakhs should be comprehensive. It should include information about the fees/charges, if any, payable for processing, the amount of such fees refundable in the case of non acceptance of application, pre-payment options a d any other matter which affects the interest of the borrower, so that a meaningful comparison with that of other banks can be made and informed decision can be taken by the borrower.
FAIR PRACTICES CODE
Loan Application forms in respect of Priority Sector advances up to Rs. 2.00 lac as well as all other loan applications have been made more informative by including information about fees/charges payable for processing on sanctioned amount, pre-payment charges, check list for papers required for appraisal and sanction/rejection of the proposal. Loan Application receipt/acknowledgment has been made part of the loan application for convenience. For Branches to follow - The processing fee is prescribed vide H.O. P & D Department circular no. 2090 dated Sept.26,2002 (subject to change- while giving loan application receipt/acknowledgment, the branch shall fill the processing fee applicable on the date in the blank space for the purpose in the receipt/acknowledgment).
In terms of the above circular the processing fee is to be charged on the sanctioned amount. So it follows that in case of rejection no processing fee is prescribed to be charged.
For time frame for disposal of loan application refer to FPC-A(b) below
(b) Banks and Financial Institutions should devise a system of giving acknowledgment for receipt of all loan applications. Time frame within which loan applications upto Rs. 2.00 Lakhs will be disposed of should also be indicated in the acknowledgment of such applications.
Every loan application shall be acknowledged/receipted and receipt/acknowledgment shall be given to the borrower-applicant.
In order to facilitate the system, acknowledgment /receipt has been made part of the Loan Application through perforation. The acknowledgment/receipt shall be given in the following form Receipt/Acknowledgment For Loan Application
Serial No.
Date...............
Branch .............
Received From .........
application for credit facilities for funded limit(s) of Rs........ and non-funded limit(s) of Rs..... along with documents as per check list. Processing fee of Rs. shall be charged on the sanctioned amount.
Disposal of the loan application shall be done within subject , however, to submission by you of complete/additional days
Information desired by the bank for appraisal of your loan application as under:
Signatures Signatures of Branch Manager
Name Name of Branch Manager
Designation
Date
( For branches to follow- The system of acknowledging loan application and time for disposal of loan application has already been prescribed vide our circulatory letter no. 79/94 dated 6.12.1994
All complete loan proposals are required to be entered in a Loan Proposal Register and serial number given which is to be given on acknowledgment/receipt to be given to the applicant . These guidelines have been reiterated vide I.D. circular no 1462 dated 19.1.1996 and 1483 dated Aug. 22, 1997.)
ii) Time Frame for disposal of a Loan Application
Loan Application shall be disposed within time frame as under , subject, however, to submission by the applicant of complete/additional information desired by the Bank for appraisal.
IN DAYS
B.O. LEVEL Z.O. LEVEL
i. Fresh/enhancement proposal 10 10 ii. Renewal/reviewal proposal 07 07 iii.Adhoc 05 05
Time for disposal of the loan proposal shall be stated in the acknowledgment/receipt given for loan applications for all loans irrespective of the amount involved.
(c) Banks / Financial Institutions should verify the loan applications within a reasonable period of time. If additional details/ documents are required, they should intimate the borrowers immediately.
- To facilitate early disposal of loan application, the Bank shall provide check-list with loan application ( The check -list has been made part of the loan application)
- In case of loans upto Rs. 2.00 Lakhs, the additional details/ documents shall be intimated to the prospective borrower at the time of giving ackowledgement and incorporated in the acknowledgment .
- In all other cases the requirement of additional details/documents shall be intimated in writing either at the time of acknowledgment or within two days of acknowledgment of the loan application.
(d)In case of small borrowers seeking loans up to Rs. 2.00 Lakhs the lenders should convey in writing, the main reason/reasons which in the opinion of the bank after due consideration, have led to rejection of the loan applications within stipulated time.
The Bank shall intimate the loan applicant the reasons of rejection in writing within the time frame of disposal of loan application.
( For convenience of the field functionaries we give in brief extant guidelines on the subject for compliance as under:
Circulatory letter no. 79/94 dated 6.12.1994 prescribes the Loan Proposal register which has a column of date and ground of rejection . I.D. circular no. 1483/97 dated Aug.22, 1997 reiterates that All sanctioning authorities BM/ZM would maintain Loan Refusal register and all types of credit facilities refused whether regular, adhoc, temporary , would be entered in the register on such refusal to BM, ZM giving reasons of rejections in writing. Loan Refusal Register should also be divided into following three parts.
- Part A: Proposal for regular credit facilities.
- Part B: Proposals for adhoc credit facilities
- Part C: Proposals for temporary credit facilities
scrutinize such statement and review such cases keeping in mind the justification, given in the proposal and the reasons for rejection.
In term of Loan Policy 2002-03 the decline of proposals relating to SC/ST are to be decided by the authority next to the competent authority in each case.
It is reiterated that the loan applicant be conveyed the reasons of rejection by the competent authority in writing.)
LOAN APPRAISAL AND TERMS /CONDITIONS
a) Lenders should ensure that there is proper assessment of credit application of borrowers. They should not use margin and security stipulation as a substitute for due diligence on credit worthiness of the borrower.
The requirement of the funds shall be assessed keeping in view loan/limit applied by the borrower-applicant and actual business need computed on the basis of prevalent policy of the Bank for assessing credit requirement subject however to the prevalent Loan Policy document of the Bank.
To implement above FPC, all sanctioning authorities are advised to follow extant guidelines on assessing credit requirement of the borrower in terms of I.D. circular nos. 1494 dated Feb.2, 1998 , 1500 dated 18.7.1998, circulatory letter 27/2001 dated 27.8.2001 and 44/98 dated 6.10.1998 and prevalent Loan Policy of the Bank .
b) The lender should convey to the borrower the credit limit along with the terms and conditions thereof and keep the borrower's acceptance of these terms and conditions given with his full acknowledge on record.
The borrower shall be conveyed sanction letter containing all terms and conditions of sanction under his/her/ authorized signatories signatures on the office copy for having accepted the terms and conditions of sanction.
(The field functionaries to note for compliance of extant guidelines vide circulatory letter no.34/99 dated Aug.23, 1999 and reiterated vide circulatory letter no. 15/2002 dated April 13, 2002 vide which the borrower is to be conveyed sanction letter containing all terms and conditions of sanction , to be given under his/her signatures on the office copy for having accepted the terms and conditions of sanction.)
c)Terms and conditions and other caveats governing credit facilities given by banks/ Financial Institutions arrived at after negotiation by the lending institution and the borrower should be reduced in writing and duly certified by the authorized official. A copy of the loan agreement alongwith a copy of all enclosures quoted in the loan agreement should be furnished to the borrower.
Loan Agreement ( i.e. Sanction letter specifying all terms and conditions of sanction duly signed by the borrower(s) for having accepted the terms and conditions) along with copies of Loan Agreements i.e. security documents executed by the borrower for the credit facility(ies) availed shall be given to the borrower To comply to above Fair Practice Code , it is advised as under: Circulatory letter no. 15/2002 dated April 13, 2002 stipulates that the borrower is to be conveyed sanction letter containing all terms and conditions of sanction , to be given under his/her signatures on the office copy for having accepted the terms and conditions of sanction. That makes it Loan Agreement in addition to security documents which are executed by the borrower.
The sanction letter contains the following points:
- Loan/limit sanctioned.
- Rate of interest /commission to be charged.
- Margin
- Details of security/collateral
- Guarantors
- Terms and conditions as per I.D. circular no. 1476 dated 27.1.1997
- Renewal/reviewal of limits
- Any other stipulation as per the requirement of the case.
- Any other stipulation as per requirement of the case.
- Any change in rate of interest and service charges etc. in
Future will be displayed on the Bank notice board and/or through Press Release to some National Dailies and no separate intimation will be given to the borrower(s) in this regard.
It is advised that terms and conditions specified in the sanction letter should be clear and unambiguous. All terms and conditions in- terms of Indispensable Requirements vide circular no.1476 dated 27.1.1997 should be mentioned in the sanction letter instead of giving reference only to circular no.1476 dated 27.1.1997. Further sanction letter should mention not only rate of interest but all other charges leviable on the advance/facility such as processing fee/up- front charges, commission on LC/BG, Inspection/Stock Audit charges, commitment charges etc.
In case of credit proposals sanctioned by the Management Committee of the Board and the Board , the resolution of the Board /Management Committee containing all terms and conditions of the sanction is signed by the Secretary of the Board and is sent to the ZO/BO along with the sanction letter prepared by the concerned department.
It is advised to all branches and controlling offices that the copy of resolution of the Board/ Management Committee be also given to the borrower under signatures.
The extant guidelines vide our circulatory letter no. 70/96 dated 18.09.1996 require to make available copies of security documents when requested for by borrowers/signatories. The branches are advised that no cause of complaint should arise in this context in future.
d) As far as possible, the loan agreement should clearly stipulate credit facilities that are solely at the discretion of lenders. These may include approval or disallowance of facilities, such as , drawings beyond the sanctioned limits, honoring the cheques issued for the purpose other than specifically agreed to in the credit sanction, and , disallowing drawing on a borrowal a on its classification as a non- performing asset or on account of non-compliance with the terms of sanction. It may also be specifically stated that the lender does not have an obligation to meet further requirements of the borrowers on account of growth in business etc. without proper review of credit limits.
Loan Agreement/Sanction Letter shall stipulate that the following credit facilities are at the discretion of the Bank:-
- Allowing drawings beyond the sanctioned limits - not allowed, unless requested well in advance with justification for temporary/adhoc accommodation and subject to permission of the competent authority as per laid down procedure.
- Honoring the cheques issued for the purpose other than agreed - will not be honored if violative of the end use/ purpose of the loan/limit applied by the borrower and as per sanction.
- Disallowing large cash withdrawals - large cash withdrawal will be allowed subject to satisfaction of the branch manager as conforming to the purpose for which the facility has been sanctioned and is not disproportionate to the normal requirement of the trade/business and conforming to the I.T. Act.
- Obligation to meet further requirements of the borrowers on account of growth in business etc. without proper revision and sanction in credit limits - not allowed, unless requested well in advance with justification for temporary/adhoc accommodation/ regular enhancement and subject conformation to prevalent Loan Policy of the Bank and to satisfaction and permission of the competent authority as per laid down procedure. Further, request for repeated temporary/adhoc accommodation will not be entertained. Adhoc limit will not be allowed for more than two times in a year and shall not be allowed within 3 months of date of sanction of regular facility. where adhoc limit has been allowed no temporary facility will be allowed.
Request for regular enhancement of the sanctioned limit within six months of date of last regular sanction will not be entertained.
For guidelines in detail for applying temporary/adhoc facility the borrower is advised to contact the branch manager. - disallowing drawings on a borrowal account on its classification as a non- performing asset -- Bank will not allow drawals in a NPA borrowal account and may seek legal remedies to recover its dues. Rehabilitation/ restructuring may be resorted in case of viable proposal and promoter's commitment to turn the account into performing category.
On account of non-compliance with the terms of sanction:
- the Bank will not release funds without compliance of all terms of sanction.
- In case funds are released on commitment of the borrower to fulfill a minor term of sanction, which may not jeopardize bank's funds , within specified period, then after lapse of the specified period , the bank may stop withdrawal in the account and may recall the entire dues.
- In case, the borrower does not comply to lending discipline as enumerated in terms of sanction, the withdrawal in the account may be stopped, pecuniary penalties may be imposed and/or entire amount may be recalled depending upon the gravity/repetition of the default.
For compliance of this FPC it is advised that all sanctioning authorities should incorporate in the sanction letter the credit facilities that will be solely at the discretion of the Bank as above.
As has been mentioned earlier also in this circular circulatory letter no. 15/2002 dated April 13, 2002 stipulates that the borrower is to be conveyed sanction letter containing all terms and conditions of sanction , to be given under his/her signatures on the office copy for having accepted the terms and conditions of sanction. That makes it Loan Agreement in addition to security documents which are executed by the borrower.
Branches/controlling offices should also to note that the above FPC d(iii) is based on our circulatory letter no. 72/93 dated 22.10.1993 on 'Monitoring of Flow of Funds' which stipulates that " Wherever a borrower requests for heavy cash withdrawal from their CA/CC accounts which seems to be disproportionate to their normal trade/business requirements, while cash withdrawal can not be refused, branches are cautioned to keep a proper vigil over request of their clients for cash withdrawals from their accounts for large amounts and ensure that amount is withdrawn for the purpose for which the facility has been sanctioned to the borrower. It is quite possible that the withdrawals may be used by the account holders for undesirable or illegal activities. This is particularly more necessary in the case of heavy withdrawals from newly opened accounts"
e) In the case of lending under consortium arrangement, the participating lenders should evolve procedure to complete appraisal of proposals in time bound manner to the extent feasible and communicate their decisions on financing or otherwise within a reasonable time.
In case of consortium advances, formal disposal of credit proposals shall be done within the following maximum time limits or otherwise within time schedule decided by the participating banks in the consortium, provided applications/ proposals are received together with required details/information supported by requisite financial and operating statements:
- Fresh/enhancement 60 days (45 days)*
- Renewal 45 days (30 days)*
- Adhoc 30 days (15 days)*
* Figures in brackets are the maximum time-frame for sanction of Export credit limits
The branches /controlling office to note that with the freedom given by RBI to participating banks in the case of lending under consortium arrangement , to evolve their own guidelines for working of the consortium , it is advised that our bank shall be guided by the above time frame for disposal of the credit proposal under consortium as a leader as were prescribed by RBI as stipulated in our I.D. circular no. 1404 dated 8.12.1993 or otherwise within time schedule decided by the participating banks in the consortium.
Disbursement of loans including changes in Terms and Conditions
Lenders should ensure timely disbursement of loans sanctioned. Lenders should give notice of any change in the terms and conditions including interest rates, service charges etc. Lenders should also ensure that changes in interest rates and charges are effected only prospectively.
- Disbursement of loans/advances shall be upon completion/execution of all security documents and other documents as per terms and conditions of the sanction mentioned in the sanction letter and compliance of all terms and conditions of sanction including legal and statutory conditions,0 by the borrower(s).
- Partial disbursement/release in anticipation of the sanction shall not be done.
- The Bank may, at its discretion, release the credit facility(ies) without compliance with some Indispensable Requirement(IR)/ terms of sanction , non-compliance of which , at the time of disbursement , may not jeopardize bank's advance and on commitment of the borrower to fulfill the minor IR/term of the sanction within specified period, then after lapse of the specified period, the bank may stop withdrawal in the account and may recall the entire dues.
- It is stipulated in the sanction , copy of which is provided to the borrower, that any change in rate of interest and service charges etc. in future will be displayed on the Bank notice board and/or through Press Release to some National Dailies and no separate intimation will be given to the borrower(s) in this regard. Change in other terms and conditions shall be conveyed in writing to the borrower.
Usually changes in interest rates and charges are effected only prospectively.
The above Fair Practices Code are based on the extant guidelines. The branches and controlling offices, for compliance of the above FPC , should be guided by the existing guidelines as under:
Our circulatory letter 15/93 dated 29.3.1993 stipulates, in case of sanctions beyond the powers of the branches as under:
" with a view to ensuring that branches are able to make credit available to their clients without undue delay and as a step towards better customer service, branches are advised that after having sent complete proposals and having finally replied to queries from the competent authority if any, they should start taking preliminary steps towards documentation/securities and compliance of indispensable requirements so that disbursements are made expeditiously and in any case within 7 days of receipt of sanction."
In terms of circular no. 1462 dated 19.1.1996 the disbursement of the loan/limit sanctioned should not be released unless documents are complete in all respects and all indispensable requirements / terms and conditions of the sanction have been completed.
Partial disbursement/release in anticipation of the sanction has been barred vide circulatory letter no. 36/2001 dated 3.12.2001.
In view of above the disbursement depends upon the completion of security documents and other documents as per terms and conditions of the sanction by the borrower.
In terms of circulatory letter no. 15/2003 dated 24.3.2003, the disbursing authority is required to give a legal compliance certificate and certificate of compliance of Indispensable requirements(I.R) and terms of sanction wherein uncomplied I.R. and terms of sanction are to be specified and time mentioned by which I.R./term of sanction will be complied.
This gives leverage to the disbursing authority to disburse without complying with some I.R/terms of sanction,( non-compliance of which, at the time of disbursement, may not jeopardize bank's advance) It is advised to all branches and controlling offices to ensure timely disbursement of loan/advance sanctioned keeping in view above guidelines.
It is stipulated in the sanction , refer to FPC B(c), copy of which is provided to the borrower, that any change in rate of interest and service charges etc. in future will be displayed on the Bank notice board and/or through Press Release to some National Dailies and no separate intimation will be given to the borrower(s) in this regard. Change in other terms and conditions are conveyed in writing to the borrower.
Usually, changes in interest rates and charges be effected only prospectively.
Post Disbursement Supervision
a) Post disbursement supervision by lenders, particularly in respect of loans up to Rs. 2.00 Lakhs should be constructive with a view to taking care of any " lender-related" genuine difficulty that the borrower may face.
The Bank shall do constructively post disbursement supervision and monitoring , particularly in respect of loans up to Rs. 2.0 lac taking into account " The Bank -related" genuine difficulty, if any, that the borrower may face.
All branches and controlling offices are advised to comply as above and ensure that no cause of complaint arise due to " The Bank -related " genuine difficulty that borrower may face.
b) Before taking a decision to recall/accelerate payment or performance under the agreement or seeking additional securities, lenders should give notice to borrowers, as specified in the loan agreement or a reasonable period, if no such condition exists in the loan agreement.
The Bank shall give notice to a borrower before taking a decision to recall/accelerate payment or performance under the agreement or seeking additional securities, as specified in the loan agreement or a reasonable period, if no such condition exists in the loan agreement.
For adherence to above FPC it is advised to all branches and controlling offices, in terms of existing guidelines , to give reasonable notice to borrowers before taking decision to recall / accelerate payment or performance under the agreement or seeking additional securities. The fact that the bank shall give notice in writing before taking decision to recall / accelerate payment or performance under the agreement or seeking additional securities , should be mentioned in the sanction letter and the branches/ controlling offices are advised to incorporate the same in the sanction letters.
The branches /controlling office should be guided by the existing guidelines vide I.D. circular no. 873 dated 3.7.1975 lays as under:-
- * written reminder is given to a borrower to remit overdue amount/entire dues
- *If a borrower fails to co-operate , personal persuasion is done by the officials of the branch.
- * If reasons for non-compliance are not satisfactory, then the same is demanded by a registered letter.
- * This is followed by a legal notice.
- * When a legal notice has been served and there is no satisfactory response in recovery of its dues and/or regularisation of the account, then the bank proceeds to file suite
- * Where the bonafide of a borrower becomes doubtful and his dealings are not satisfactory and /or his general market reputation has been adversely affected, prompt recovery action has been prescribed. H.O. Law & Recovery Department circular no. 124 dated 30.9.2002 outlines the Recovery Management Policy and Guidelines for settlement, write-off in borrowal account.
c) Lenders should release all securities on receiving payment of loan or realisation of loan subject to any legitimate right of lien for any other claim lenders may have against borrowers. If such right of set off is to be exercised, borrowers shall be given notice about the same with full particulars about the remaining claims and the documents under which lenders are entitled to retain the securities till the relevant claim is settled / paid.
The Bank shall release all securities on receiving payment of loan or realisation of loan subject to any legitimate right of lien for any other claim the Bank may have against borrowers. If such right of set off is to be exercised, borrowers shall be given notice about the same with full particulars about the remaining claims and the documents under which the Bank is entitled to retain the securities till the relevant claim is settled / paid.
For adherence to above FPC, it is advised that the above FPC be incorporated in the sanction letter.
In terms of Loan Policy 2002-2003 , Branch Manager is competent to release the Title Deeds to the owner of the property i.e. borrower/guarantor , when an account is adjusted in full and final. This is true of other securities.
General
a) Lenders should restrain from interference 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 lender).
b) Lenders must not discriminate on grounds of sex, caste and religion in the matter of lending. However, this does not preclude lenders from participating in credit-linked schemes framed for weaker sections of the society.
c) In the matter of recovery of loans, the lenders should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.
d) 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 lender, if any, should be conveyed within 21 days from the date of receipt of request.
- The Bank shall restrain from interference 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 lender).
- The Bank shall not discriminate on grounds of sex, caste and religion in the matter of lending. However, this does not preclude the Bank from participating in credit-linked schemes framed for weaker sections of the society.
- In the matter of recovery of loans, the Bank shall not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.
- 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 lender, if any, shall be conveyed within 21 days from the date of receipt of request.
The following Fair Practices Code be also observed scrupulously:
IMPORTANT DECLARATIONS
- To provide professional, efficient, courteous , diligent and speedy services in the matter of retail lending.
- Not to discriminate on the basis of religion, caste, sex,descent or any of them.
- To be fair and honest in advertisement and marketing of loan products.
- To provide customers with accurate and timely disclosure of terms, costs, rights and liabilities as regards loan transactions
- If sought , to provide such assistance or advise to customers applying for loans.
- To attempt in good faith to resolve any disputes or differences with customers by setting up complaint redressal cells within the organization.
- To comply with all regulatory requirements in good faith.
- To spread general awareness about potential risks in contracting loans and encourage customers to take independent financial advice and not act only on representation from banks.
PRODUCT INFORMATION
- A prospective customer would be given all the necessary information adequately explaining the range of loan products available with our Bank to suit his needs.
- On exercise of choice, the customer would be given the relevant information about the loan product of his choice.
- The customer would be explained the processes involved till sanction and disbursement of loan and would be notified of timeframe within which all the processes will be completed ordinarily at our Bank.
- The customer would be informed of the names and phone number of branches and person whom he can contact for the purpose of loan to suit his needs.
- The customer would be informed the procedure involved in servicing and closure of the loan taken.
ACCOUNT PRACTICES
- Our Bank would provide regular statement of accounts, unless not found necessary by the customers.
- Our Bank would notify relevant due dates for application of agreed interest, penal interest, default interest and charges if they are not mentioned in the loan applications, documents or correspondence.
- Our Bank would notify in advance and any change in accounting practices that would affect the customer, before implementation.
INFORMATION SECRECY
- All personal information of the customer would be confidential and would not be disclosed to any third party unless agreed to by the customer. The term " Third party" excludes all Law enforcement agencies, Credit Information Bureau, Reserve Bank of India, other banks and financial institutions.
- Subject to above para, customer information would be revealed only under the following circumstances, namely
- If our Bank is compelled by Law
- If it is in the Public Interest to reveal the information
- If the interests of our Bank require disclosure.
GRIEVANCES REDRESSAL MECHANISM
- To enable the customers to voice their grievances or offer suggestions for improvement in customer service, "Customer Day" is observed at all the offices of the bank across the organization covering branches, Zonal Offices and Head Office, on 15th of every month(next day if 15th is a holiday or a half day). During specified hours on this day any customer can meet senior/top executives of the Bank, including Chairman & Managing Director, without prior appointment.
- Customer Service Committee Meetings are held on monthly basis on first Monday of each month at all branches/ Zonal Offices. Customer/borrower can also attend the same and give your suggestions/air your grievances.
- In case of any complaint , the matter may be first brought to the notice of concerned branch manager for immediate redressal. If the complaint is not redressed to the satisfaction of the customer, the matter may be taken up with the Zonal Manager, as per address given in the schedule- III.
- If the complainant still feels unsatisfied with the response received, he can address his complaint to the Bank's nodal officer designated to deal with customers' complaints/grievances giving full details of the case,as per schedule -I
- After exhausting all the above machinery/channels, if the customer is not satisfied, he may write to Chairman & Managing Director of the Bank.
- Even after this , not satisfied he is free to take recourse to the following:
- Directorate of Public Grievances, Govt. of India, Cabinet Secretariat , Sansad Marg, New Delhi.
- The Banking Ombudsman located in State Capitals, under RBI Ombudsman Scheme, 1995, at the addresses given in the schedule-II.
- The District Consumer Forum under Consumer Protection Act1985. g) Anonymous complaints will not be entertained .
- Every complaint/grievances shall be disposed of within a period of 7 days on its receipt at the place where cause of action lies i.e. Branch. Under no circumstances , a complaint/grievance shall be allowed to remain pending for more than 15 days without proper reasons
The branches/controlling offices to note that the above grievances redressal mechanism is prescribed vide H.O. Planning & Development Department circulatory letter no. 12/2001 dated 11.08.2001 on Implementation of the Citizens' Charter .
The branches /controlling offices are advised to redress the complaints/grievances as per system prescribed vide HO Inspection Department vide their circular no. 97/2002 dated 29.11.2002 and ensure that the same is followed in letter & spirit .
PERIODICAL REVIEW OF COMPLIANCE OF FAIR PRACTICES CODE & THE FUNCTIONING OF GRIEVANCES REDRESSAL MECHANISM:
- Keeping in view RBI guidelines, half yearly review as on 30th June and 31st Dec. of Compliance of Fair Practices Code and the functioning of Grievances Redressal Mechanism to the Board shall be done. The branches and controlling offices are advised to abide by Fair Practices Code as above for best customer service and satisfaction so that no cause of complaint is reported to the Board.
- All branches and controlling offices are advised to comply as above.
The Bank’s Policy on Fair Practices for Lenders is already in place and the detailed guidelines in respect of Fair Practices Code have been issued vide I. D. Cir. No. 1567 dated 24.09.2004. The RBI subsequently issued few more guidelines on the subject matter. We are reproducing the same as under :
| Existing guidelines | Revised Guidelines |
|---|---|
| Banks/FIs were advised that loan application forms in respect of priority sector advances upto Rs.2.00 lacs should be comprehensive and should include information about the fees/charges, if any, payable 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, so that a meaningful comparison with that of other banks can be made and informed decision can be taken by the borrower. | With a view to achieving greater transparency and in the light of experience gained, Reserve Bank of India has now decided that the these instructions would be applicable to all loan applications in respect of all categories of loans irrespective of the amount of loan sought by the borrower. With a view to achieve the objective, it has been decided that fee chart as per Annexure ‘A’ be obtained from all the applicant(s) along with loan application Form and kept as part of Loan documents. |
| RBI has informed that in terms of Para 2 (i) (d) of the above Circular dated 5.5.2003, banks/FIs were advised that in the case of small borrowers seeking loans up to Rs.2.00 lacs, the lenders should convey in writing, within stipulated time, the main reason/reasons which, in the opinion of the Bank have led to rejection of the loan applications. | RBI on a review, has now decided that in case of all categories of loans irrespective of any threshold limits, including credit card applications, banks should convey in writing the main reason/reasons which, in the opinion of the bank have led to rejection of the loan applications. |
BMs/ZMs to make strict compliance of above instructions.
(Gurcharan Singh)
Deputy General Manager (A)
ANNEXURE ‘A’
Processing Fee/Upfront Fee:
| PROCESSING CHARGES | Charges (for the year 2006-07 onwards)as per H.O ADV.CIR.letter 6/2007dated 22.02.2007 |
|---|---|
| Fund-Based Limit | |
| Upto Rs.25,000/- | NIL |
| Above Rs.25000/- up to Rs.2.00 lacs | Rs.400/- |
| Above Rs.2.00 lacs | Rs.300 per lac or part thereof, subject to maximum of Rs.15.00 lacs |
| Agriculture Advances except IRDP | 0.50 % on total project outlay on one time basis |
| Advance against deposit, Govt. Securities,Mutual Fund Units, UTI Units, NSC/KVPs/IVPs and staff loans of any type | NIL |
| Non fund based limits | Same as above (S.No.3) |
| UPFRONT FEE | Revised w.e.f. 1.2.2007 |
| All Term Loans exceeding Rs.50 lacs | All Term Loans exceeding Rs.50 lacs not covered under Real Estate Sector | 1% subject to maximum of Rs.15.00 lacs. In case of consortium a/cs if other banks are charging higher fee, same is to be charged by our Bank |
| Term Loans exceeding Rs.50 lacs covered under Real Estate Sector | 2% with no maximum cap. |
