Fair Practices Code for Lenders' Liability
Applications for loans and their processing
- Bank's loan application form will be comprehensive to the extent practical. Specific information as may be required based on specifics of the transaction structure and product offered will be obtained separately on a case to case basis.
- Bank will give an acknowledgement to the prospective borrowers on receipt of loan application evidencing the date of receipt of loan application.
- It will be ensured that loan applications are ordinarily verified within a reasonable period after receipt of the application, and if any additional details/documents are required for the purpose of credit appraisal, the borrowers will be intimated immediately.
- If after due consideration, the proposal is rejected at the preliminary stage with the approval of relevant delegated authority, the decision and reasons thereof will be communicated to the applicant within a reasonable period.
- If after due consideration, the proposal is admitted for conducting detailed due diligence, indicative terms including inter alia fees/charges if any payable for processing, refundability or otherwise of such fees and other charges in case of non-acceptance of the proposal or cancellation of sanction, prepayment options and other terms that may affect the interest of the borrower, will be communicated to the applicant for confirmation.
Loan appraisal and terms/conditions
- It will be ensured that there is a proper assessment of credit requirement of the borrower. Credit limit, that may be sanctioned, will be mutually settled with the borrower, having regard to Bank's norms and parameters under the relevant lending programme.
- Stipulation of margin and security will be based on due diligence and creditworthiness of borrower.
- Bank will advise the sanction terms to the borrower and keep on record the borrower's acceptance to the same given with its full knowledge
- Terms and conditions and other caveats governing the credit facilities sanctioned by the Bank that may have been arrived at after negotiations with the borrower will be reduced in writing in the form of loan agreement/undertaking/other similar documentation. A copy of such agreement/undertaking/other similar documentation will be made available to the borrower for its record.
- The loan agreement/undertaking/other similar documentation will clearly specify disclaimer of liability/commitment of the Bank to the borrower with regard to allowing drawings beyond the sanctioned limits, meeting further financial requirements of the borrower on account of growth/expansion in business without review/revision and/or sanction of additional credit limits, and terminating availment of any facility upon classification of the borrower's existing account as a non-performing asset or in the event of non-compliance by it with sanction terms.
- in case of lending under consortium arrangement, bank will ensure completion of appraisal of proposals in a time bound manner to the extent feasible and communicate its decision on financing or otherwise within a reasonable time
Disbursement of loans including changes in terms and conditions
- Bank will ensure timely disbursement of loans sanctioned, subject to the borrowers fulfilling conditions precedent and complying with the disbursement procedure as notified to the borrower in advance.
- The borrower will be given advance notice of any change in terms and conditions including interest rates, to the extent not specified in loan agreement/undertaking/other similar documentation. Any change in interest rate(s) and other charges will be effective prospectively unless otherwise specifically provided in loan agreement/undertaking/other similar documentation and except those imposed by regulatory/government authority which will be on back to back basis.
Post disbursement supervision
- In case of financing for Grassroots Enterprises, post-disbursement supervision by the Bank will be conducted so as to take care of any “lender related” genuine difficulty that the borrower may face.
- Bank will give notice to the borrowers of such period as may be specified in loan agreement/ undertaking/other similar documentation, or within a reasonable period if no such provision exists therein, before taking any decision to recall/accelerate payment or performance under the loan agreement/undertaking/other similar documentation or seeking additional securities.
- It will be ensured that all securities charged to the Bank are released on full satisfaction/realisation of loan, unless Bank has a legitimate right of lien/set-off for any other claim against the borrower or its group/associate company(ies) in which the promoters have direct interest or stood guarantee. If such right of set-off is to be exercised, borrower will be given prior notice about the same with full particulars of the remaining claim of the Bank and the document(s) under which Bank seeks to be entitled to retain the securities until relevant claim is settled/paid.
- Bank will restrain from interfering in the affairs of the borrowers except in accordance with the loan documents (unless new information not earlier disclosed by the borrower comes to the notice of the Bank).
- Bank will not discriminate on grounds of sex, caste and religion in the matter of lending. However, this does not preclude Bank from participating in credit-linked schemes framed for weaker sections of society.
- In the matter of recovery of loans, Bank should not resort to harassment of the borrower by persistently following up with the borrower at odd hours or use of muscle power for recovery of loans.
- In the case of request for transfer of the borrower's account, either from the borrower or from a bank/financial institution, which proposes to take over the account, decision of the Bank will be conveyed within 21 days from the date of receipt of the request
Grievance redressal mechanism
- To seek redressal to their grievances, a borrower may write to a designated senior official whose contact particulars would be publicised on the Bank’s website and other publications of the Bank, clearly stating the nature of their grievance along with necessary documents, if any. A copy of the same will be acknowledged and returned to the borrower, where the complaints are received through letters / forms.
- The designated officer will initiate necessary action making all efforts to resolve the same expeditiously, but in any case within a period of about one month.
- A borrower aggrieved by any decision of the designated official may prefer a representation to the Appellate Authority. The Appellate Authority would generally be of the rank of Deputy Managing Director [DMD] of the Bank and in absence of a DMD, the Managing Director [MD] would be the Appellate Authority. The Appellate Authority will consider the representation and after making enquiries as he / she deems fit, inform the borrower his / her decision within a period of one month.
- The Bank has in place a mechanism to ensure that all disputes arising out of the decisions are heard and disposed of at least at the next higher level. A report in this regard will be submitted to the Board on an annual basis.