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Fair Practices Code

THE FAIR PRACTICES CODE (FPC) FOR LENDERS ADOPTED BY THE BANK

 

CODE No.  
1.

The Bank would have the loan application forms containing information about the fees / charges payable for processing, the amount of such fees refundable in case of non-acceptance of the application, pre-payment options, etc., so that a meaningful comparison with that of other banks can be made by the prospective borrowers to enable them to take informed decisions.

2.

The Bank would give acknowledgement for receipt of all loan applications

3.

The Bank would indicate the time frame within which loan applications containing full information / details / documents will be disposed off while giving acknowledgements for receipt of the same.

4.

The Bank would verify the loan applications within a reasonable period of time. If additional details / documents are required, it would intimate the applicant/s / borrower/s immediately thereafter.

5.

The Bank would ensure that there is proper assessment of credit applications submitted by the applicant/s / borrower/s.

6.

The Bank would carry out proper due diligence on the creditworthiness of the applicant/s / borrower/s notwithstanding the stipulation of any security and margin made by it.

7.

The Bank would make proper assessment of the borrowers’ credit needs in order to take care that the credit limit/s, which are, sanctioned meet/s the genuine requirement of such borrowers.

8.

The Bank would convey to the applicant/s / borrower/s concerned, the credit limits sanctioned to them along with the terms and conditions thereof and obtain their specific acknowledgement for acceptance of the same for its records.

9.

While conveying the terms and conditions and other caveats governing the credit facilities stipulated by the sanctioning authority of the Bank in writing to the applicant / borrower, the authority of the Bank as per whose orders the sanction communication has been released would also be duly indicated therein.

10.

The Bank shall invariably furnish a copy of the loan agreement along with a copy of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans, even in the absence of specific request from the borrower.

11.

The Bank would convey in writing within the time earlier indicated in the acknowledgement given for receipt of the related loan applications, the reason/s which have led to the rejection, if any, thereof.

12.

Allowing drawings beyond sanctioned limit, honoring the cheques issued for the purpose/s other than specifically agreed to in the credit sanction, disallowing drawings on a borrowal account on its classification as a non-performing asset or on account of non-compliance with the terms of sanction etc., would be solely at the discretion of the Bank. Again, the Bank does not have an obligation to meet additional requirement/s of borrowers on account of growth in business etc. without the proper review of the credit limits of such borrowers.

13.

In the case of lending under consortium arrangement, the Bank would have procedures to complete the appraisal of proposals in a time bound manner to the extent feasible and communicate its decision on financing or otherwise within a reasonable time.
In respect of credit proposals other than under consortium arrangements, the Bank shall follow the time norms as prescribed in its Credit Policy document.

14.

The Bank would ensure timely disbursement of loans sanctioned in conformity with the terms and conditions of sanction.

15.

The Bank would give the notice of any change in the terms and conditions to the borrowers concerned. In respect of interest rates and service charges etc., the Bank would give notice to the borrowers only in respect of any upward revision. The Bank would also ensure that changes in interest rates and service charges are effected only prospectively.

16.

The Bank would promptly attend to any “lender-related” genuine difficulty/ies that the borrowers may face.

17.

Before taking a decision to recall / accelerate payment or performance under the agreement or seeking additional securities, the Bank would give reasonable notice to the borrowers concerned in writing.

18.

The Bank would release all securities on receiving payment of loan or realisation of loans subject to any legitimate right or lien for any other claim; the Bank may have against borrowers. If such right of set off is to be exercised, the borrower would 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 security till the relevant claim is settled / paid.

19.

The Bank in the normal course would endeavour not to interfere in the affairs of its borrowers which are not either directly or indirectly related to its extending the credit facilities unless new information not earlier disclosed by the borrowers concerned has come to the notice of the Bank

20.

The Bank will 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.

21.

In the matter of recovery of loans, the Bank would not use any muscle power.

22.

In case of receipt of request for transfer of borrowers’ accounts either from such borrowers or from the banks / FIs which propose to take over the accounts, the consent or otherwise of the Bank, would be conveyed within 15 days from the date of receipt of such requests if the related accounts are within the sanctioning powers delegated to any of the officials at the branch level. In respect of a request for transfer of a borrowal account which is within the sanctioning powers of officials at RO / CO / HO, the branch concerned would take up with the concerned authority within 7 days of receipt of such requests and the latter would communicate decision thereon within 15 days from the date of receipt of the related recommendations from the branch/ CO.

23.

The Bank would have a Grievance Redressal Mechanism within the organisation to resolve disputes, if any, arising in relation to the FPC for lenders where all disputes arising out of the decision of a Bank’s functionary falling upto the sanctioning powers of C&MD are heard and disposed off at least by the next higher authority at RO / CO / HO. In respect of proposals falling under the sanctioning powers of the Management Committee (MC) of the Board, grievances if any, would be redressed only by the said MC of the Board. The Bank would also conduct periodical reviews of the compliance to this Fair Practices Code and the functioning of the grievance redressal mechanism at various levels. A consolidated report of such reviews would be submitted to the Board of Directors of the Bank at regular intervals.

24.

Levying certain charges in addition to the processing fee which are not initially disclosed to the borrower is an unfair practice.
Branches to note to disclose the ‘all-in-cost’ expense that should be borne by the customer.