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Fair Practices Code - For Borrowers

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Fair Practices Code - For Borrowers

1. APPLICATIONS FOR LOANS & THEIR PROCESSING

  • Loan application forms in respect of all categories of loans irrespective of the amount of loan sought by the borrower shall include information about the margin requirements, interest rate, method of calculation of interest in the loan account, amount of refundable fee in case of non-acceptance of application, fees/charges payable for processing, pre-payment options and charges, penalty for delayed repayments if any, conversion charges for switching loan from fixed to floating rates or vice versa, existence of any interest reset clause etc. etc.
  • The loan applications shall be verified within a period of 7 days. If additional details/documents are required, the applicants shall be intimated immediately. Upon completion of all requirements/formalities by the applicants, an acknowledgement for receipt of loan applications shall be given to them.
  • Time period within which loan applications upto Rs.2 lakhs will be disposed of shall be indicated in acknowledgement of such applications.
  • Wherever possible, the main reasons, which have lead to rejection of the loan applications of all categories of loans irrespective of any threshold limits, including credit card applications, shall be conveyed to the applicant.
  • An ‘all-in-cost’ including all such charges involved in processing/sanction of loan application shall be disclosed to the customers in a transparent manner to enable the customers to compare the rates/charges with other sources of finance.
  • Borrower shall be provided with a checklist of the documents to be submitted (compliant with legal and regulatory requirements) along with the loan application form to submit the application complete in all respects. If required, the Bank shall assist the borrower in filling up the loan application form.
  • The details mentioned by the borrower in the loan application shall be verified by contacting him/her at his/her residence and / or on business telephone numbers and / or through any alternative channels and / or physically visiting his/her residence and / or business addresses through agencies appointed by the branch for this purpose, if deemed necessary by the Bank.

2. APPRAISAL TERMS & CONDITIONS

  • Need based credit requirement of the borrowers shall be assessed as per Bank guidelines. Margin and security stipulation shall not be used as a substitute for due diligence on credit worthiness of the borrowers.
  • The sanctioned limits along with the terms & conditions thereof shall be conveyed to the borrowers on a prescribed letter and borrower`s acceptance of these terms and conditions shall be kept on record.
  • The disbursal of credit facility shall be solely at the discretion of the Bank and Bank may disallow facility, keeping in view its exigencies; the Bank may disallow drawing beyond the sanctioned limits. Cheques issued for the purpose other than specifically stated in the credit sanction or in the agreement may be dishonoured/returned.
  • Drawing in the account may be disallowed on its classification as a non performing asset or on account of non-compliance with the terms of sanction or agreement.
  • The Bank shall not be under obligation to meet further requirements of the borrowers on account of growth in business, etc. without proper review of credit limits.
  • In the case of lending under consortium arrangement, the loan proposal shall be disposed of within the prescribed time norms provided applications/ proposals are received together with required details/ information supported by requisite financial and operating statements and decision on financing or otherwise shall be communicated to the applicant within a prescribed time.
  • Bank shall, invariably supply authenticated copies of all loan documents executed by the Borrower at Bank`s cost along with the copy of all enclosures quoted in the loan agreement as part of disbursement welcome kit. However, for providing additional authenticated copies, actual cost incurred by bank shall be levied.
  • Bank will have an unqualified right to pass on to the Credit Reference Agencies the details of his loan account in such manner and through such medium as the bank in their absolute discretion may think fit.
  • Bank will give written receipt for all documents to title taken as security/ collateral for any loan.

3. DISBURSEMENT OF LOANS INCLUDING CHANGES IN TERMS & CONDITIONS

  • The disbursement of loans sanctioned shall be made in time in conformity with the terms and conditions governing such sanction.
  • Changes in the terms & conditions including interest rates, service charges etc. shall be advised to the borrowers. Changes in interest rate and charges shall be made effective only prospectively. Besides, service charges, rate of interest, etc. shall also be made available on the Bank`s website.

4. POST DISBURSEMENT SUPERVISION

  • Post-disbursement supervision particularly in respect of loans upto Rs.2 lakhs, shall be constructive with a view to take care of any "lender-related" genuine difficulty that the borrowers may face.
  • Before taking decision to recall/accelerate payment or performance under the agreement or seeking additional securities, notice shall be given to the borrowers, (except in exigencies) for a period as specified in the loan agreement or 30 days if no such condition exists in the loan agreement.
  • Bank will provide the borrower with an annual statement of account of his/her term/ demand loans. Bank will provide the borrower with the loan statement, more often, if required, at a cost which will be indicated in the Tariff Schedule.
  • Bank shall return to the borrower all the securities / original movable/ immovable property documents / title deeds to mortgaged property and remove charges registered with any registry including Central Registry for Securitization, Asset Reconstruction and Security Interest (CERSAI) within 15 days of the repayment of all dues agreed to or contracted. If any right to set off is to be exercised for any other claim, the branch will give due notice with full particulars about the other claims and retain the securities/ documents / title to mortgaged property till the relevant claim is settled / paid.
  • In case of delay in releasing of original movable / immovable property documents or failing to file charge satisfaction form with any registry including CERSAI beyond 30 days after full repayment/ settlement of personal loan, the branches shall communicate to the borrower reasons for such delay. In case where the delay is attributable to the bank, bank shall compensate the borrower at the rate of Rs 5,000/- for each day of delay. Payment of compensation and powers for payment of compensation shall be dealt with in accordance with the bank’s existing Customer Compensation policy. Accordingly, policy with regard to “Customer Compensation” issued by Customer Care Centre from time to time shall be adhered to.
  • In the event of branch losing the securities / original movable/ immovable property documents / title deeds that the borrower had provided to the branch when he/she availed a loan, branch shall compensate the borrower for the loss. The branch shall issue a certificate indicating the securities / original movable/ immovable property documents / title deeds lost and extend all assistance to the borrower in obtaining duplicate documents, etc. at bank’s cost.
    For Personal Loan
    In case of loss/damage to original movable / immovable property documents, either in part or in full, the Branch shall assist the borrower in obtaining duplicate/certified copies of the movable / immovable property documents and shall bear the associated costs in addition to paying compensation as defined in above para.
    However, in such cases, an additional time of 30 days will be available to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days).
  • The compensation provided for delay in release of movable/ immovable property documents as defined in above para shall be without prejudice to the rights of a borrower to get any other compensation as per any applicable law.
  • Bank will not levy foreclosure charges / pre-payment penalties on all floating rate term loans sanctioned to the borrower (in his/her individual capacity)
  • The borrower shall be given the option of collecting the original movable / immovable property documents either from the branch where the loan account was serviced or any other branch/office of the bank where the documents are available, as per preference of the borrower.
  • Timeline and place of return of original movable/ immovable property documents shall be mentioned by Bank in the sanction letter.
  • To address the contingent event of demise of the sole borrower or joint borrowers, the procedure for return of original movable/immovable property documents/title deed to the legal heirs is formulated and available on the Bank’s website for customer information.

5. SECURITIZATION OF LOANS / CARD DUES

  • In case the bank securitizes (sells) a borrower’s loans / dues on his/her card to another entity, bank will advise the borrower the name and contact details of such entity along with the amount of his/her loan / dues transferred to them. In the normal course, loans / credit card dues, which are Non-Performing Assets (NPAs) are considered for sale to Asset Reconstruction Company (ARC) through assignments. Where dues are settled through compromise, assigning such assets to ARC does not arise.
  • The borrower will then be liable to pay the amount due to the entity to which the loan / dues have been transferred.
  • The entity to which the loan / dues have been transferred will continue to report bank’s credit information to the CICs.
  • Bank will endeavor to assist the borrower in case he/she has a grievance against the entity to which his/her loan / dues have been transferred by the bank.
  • For all complaints against the entity to which the borrower’s loan / dues have been transferred by the bank, bank will remain the Nodal Authority for resolution. Bank will treat these complaints as if they are against the bank and ensure that these are resolved promptly.

6. GENERAL

  • Bank will not interfere 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 Bank).
  • In the matter of lending, discrimination shall not be on grounds of sex, caste and religion. However, this does not preclude Bank from participating in credit scheme 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 accompanied with a request from borrower, which proposes to take-over the account, the consent or otherwise i.e, objection of the Bank, if any, shall be conveyed within 21 days from the date of receipt of request.
  • Besides treating all the personal information of the customer as private and confidential and revealing the information in exceptional cases as mentioned in the Code, bank will not use the personal information of the customer for marketing purposes, unless specifically authorized by the customer to do so.
  • The written permission of the customer(s) will be required before giving any banker`s reference about him/ them.
  • The customer(s) will be explained of the extent of his rights under the existing legal framework for accessing the personal records that the bank holds about him/ them.
  • The permission of the customer (borrower) will be obtained for giving confidential information about his finances to the person giving the guarantee or other security for his (borrower’s) liabilities or to their legal adviser.
  • When the borrower avails a loan facility involving immovable property and / or movables as primary or collateral security, branch will advise him/her the functioning of CERSAI and the fact that their records will be available for search by any lender or any other person desirous of dealing with the property / assets. Bank will notify its charge to CERSAI.
  • Complaints arising with regard to non-compliance of Fair Practice Code shall be dealt with in accordance with the existing Grievances Redressal Mechanism including reporting thereof.
    RBI Circular on ‘XBRL Returns- Harmonization of Banking Statistics’ dated January, 04,2018 defines Personal Loans as loans given to individuals and consist of (a) consumer credit, (b) education loan, (c) loans given for creation/ enhancement of immovable assets (e.g., housing, etc.), and (d) loans given for investment in financial assets (shares, debentures, etc.)

Others

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