Fair Practices Code for Lenders

The Bank's loan application forms in respect of all categories of loans irrespective of the amount of loan sought by the borrower shall be comprehensive to include information about rate of interest (fixed / floating) and manner of charging (monthly / quarterly / half-yearly / yearly rests), process fees and other charges, penal interest, 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. The bank shall also inform ‘all-in cost’ to the customer to enable and aid comparison with other sources of finance.
We shall provide acknowledgement for receipt of all loan applications and verify the loan applications within a reasonable period of time. If additional details / documents are required, we shall intimate the borrowers immediately. If all the requirements are complied with by borrowers, we shall acknowledge the same and state the specific time period from the date of acknowledgement within which a decision on the loan request will be conveyed to the borrowers. Acknowledgement will also state the amount of process fees paid or to be paid and the extent to which such fees shall be refunded in the event of rejection of any application for loan.
In the case of rejection of any loan application, including credit card application, irrespective of category/ threshold limit we shall convey in writing the specific reasons thereof.
The Bank shall ensure that there is proper assessment of credit requirement of borrowers. The credit limit, which may be sanctioned, should be mutually settled. The bank shall not use margin and security stipulation as a substitute for due diligence on credit worthiness of the borrower.
Terms and conditions and other caveats governing credit facilities will be arrived at after negotiation with the borrower and shall be reduced in writing duly witnessed and certified by the authorised sanctioning authority; in respect of advances sanctioned by the Board of Directors or its committee, the sanction terms shall be certified internally by the authorised signatory at Company Secretary level and communicated to the Department concerned.
We shall ensure timely disbursement of loans sanctioned. Stipulation of margin and security shall be based on due diligence and credit worthiness of borrowers.
The Bank shall keep the borrowers apprised of the state of their accounts from time to time and shall give notice of any change in the terms and conditions including interest rates, service charges etc. We shall also ensure that changes in interest rates and charges are affected only prospectively. To ensure the above, we shall ensure necessary information dissemination mechanism.
To the extent possible, the loan agreement shall clearly stipulate credit facilities that are solely at the discretion of the bank. These may include approval or disallowance of facilities, such as, drawings beyond the sanctioned limits, honouring cheques issued for the purpose other than specifically agreed to in the credit sanction, and disallowing drawing on a borrowal account 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 bank 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.
The Bank shall give reasonable notice to borrowers before taking decision to recall / accelerate payment or performance under the agreement or seeking additional securities.
We shall release all securities on receiving payment of loan or realisation of loan subject to any legitimate right of lien for any other claim we 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 we are entitled to retain the securities till the relevant claims are settled / paid.
The Bank will 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, comes to the notice of the bank.
The 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 the society.
In the matter of recovery of loans, the bank will 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 bank, if any, will be conveyed within 21 days from the date of receipt of request.
The Bank will invariably furnish a copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction/ disbursement of loans.
Grievance Redressal Mechanism shall be as per Board Approved CRD policy published under: SIB Website>Disclosures> Bank’s Policy Documents>Policy for Grievance Redressal in Banks.
Charges / fees shall be non-discriminatory.
The bank shall 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 / her full knowledge on record.
In the case of lending under consortium arrangement, the participating lender banks shall evolve procedures to complete appraisal of proposals in a time bound manner to the extent feasible and communicate the decisions on financing or otherwise within a reasonable time.
The bank shall carry out independent and objective credit appraisal in all cases and must not depend on credit appraisal reports prepared by outside consultants, especially the in-house consultants of the borrowing entity.