Fair Practice Code

PREAMBLE

Scope :

1(a) FAIR LENDING PRACTICIES CODE (FLPC FOR SHORT) is a voluntary come commended by Indian Banks' Association (IBA) to its Member Banks, which aims to achieve synchronization of best practices of various Member banks for common approach, when they are dealing with Customers in India. It aims to provide valuable inputs to Customers and facilitates effective interaction of customers with Member banks.

Extent :
1(b) FLPC is purely voluntary and would apply to a Member Bank from such date as and when subscribed to by the Member bank and their subscription being notified in their web sites or such other medium of Member Bank's choice. A list of Member Banks who have subscribed to FLPC can be had from IBA.

FLPC contains 8 important declarations from Members, the spirit of which pervades the entire FLPC provisions.

Important declarations:

Our Bank declares and undertakes

1. To provide professional, efficient, courteous, diligent and speedy services in the matter of retail lending.
2. Not to discriminate on the basis of religion, caste, sex, descent or any of them.
3. To be fair and honest in advertisement and marketing of Loan Products.
4. To provide customers with accurate and timely disclosure of terms, costs, rights and liabilities as regards loan transactions.
5. If sought, to provide such assistance or advise to customers applying for loans.
6. To attempt in good faith to resolve any disputes or differences with customers by setting up complaint redressal cells within the organizations.
7. To comply with all the regulatory requirements in good faith.
8. 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.

FAIR PRACTICES:

Product Information:

1. 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.
2. On exercise of choice, the customer would be given the relevant information about the loan product of his choice.
3. 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.
4. The Customer would be informed of the names and phone numbers of branches and the persons whom he can contact for the purpose of loan to suit his needs.
5. The Customer would be informed the procedure involved in servicing and closure of the loan taken.

Interest Rates
Interest Rates for different loan products would be made available through and in any one or all of the following media, namely:

1. In our Bank's Web site
2. Over phone, if Tele Banking services are provided
3. Through prominent display in the branches and at other delivery points
4. Through other media from time to time

On demand, Customers can have full details of method of application of interest. Revision in Interest Rates:

1. Our Bank would notify immediately or as soon as possible any revision in the existing interest rates and make them available to the customers in the media listed in Para 3.2.1.
2. Interest Rate revisions to the existing customers would be notified within 15 working days from the date of change.

Default Interest / Penal Interest :

• Our Bank would notify clearly about the default interest / penal interest rates to the prospective customers.

Charges:

1. Our Bank would notify details of all charges payable by the customers in relation to their loan account.
2. Our Bank would make available for the benefit of prospective customers all the details relating to charges generally in respect of retail products in the media as specified in Para 3.2.1.
3. Any revision in charges would be notified in advance and would also be made available in the media as listed in Para 3.2.1.
4. Our Bank would clearly specify the charge account for interest and charges, wherever necessary and get a mandate for debiting the said charge account along with the documentation.

Terms and Conditions for Lending:

1. Our Bank would ordinarily give an acknowledgement of receipt of loan request and if demanded by the customer, a copy of the application form duly acknowledged would also be given, as soon as the customer chooses to buy a product or service of his choice.
2. Immediately after the decision to sanction the loan, our Bank would show draft of the documents that the customer is required to execute and would explain, if demanded by the customer, the relevant terms and conditions for sanction and disbursement of loan.
3. Loan Application forms, Draft documents or such other papers to be signed by a customer should comprehensively contain all the terms and conditions relating to the product or service of his choice.
4. Wherever possible, reasons for rejection of loan would be conveyed to the customers.
5. Before disbursement of loan and on immediate execution of the loan documents, our Bank would deliver a copy of the duly executed documents to the customers.

Account Practices:

1. Our Bank would provide regular statement of accounts, unless not found necessary by the customers.
2. 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.
3. Our Bank would notify in advance 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;

1. If the Our Bank is compelled by law
2. If it is in the Public Interest to reveal the information
3. If the interest of our Bank require disclosure

Financial Distress:

1. Our Bank would reckon cases of customer's financial distress and consider them sympathetically.
2. Customer would be encouraged to inform about their financial distress as soon as possible.
3. Our Bank would adequately train the operational staff to give patient hearing to the customers in financial distress and would render such help as may be possible in their view.

Grievance Redressal

1. Our Bank would have a Grievance Redressal Cell/Department / Center within or outside the organization.
2. Our Bank would make available all the details, namely;
   1. Where a complaint can be made
   2. How a complaint should be made
   3. When to expect a reply
   4. Whom to approach for redressal of grievance etc.,
   To the customers individually on demand and through the media listed in Para 3.2.1.
3. Response to a complaint whether positive or negative or requiring more time or redressal would be given within a maximum period of four weeks from the date of complaint, unless the nature of complaint is such that it required verification of voluminous facts and figures.

Applications for loans and their processing

1. Loan application forms in respect of all categories of loans irrespective of the amount of loan sought by the borrower will be comprehensive and include information about the (i) fees/Charges, if any, payable for processing, (ii) the amount of such fees refundable in the case of non-acceptance of application, (iii) pre-payment options and any other matter which effects the interest of the borrower, so that a meaningful comparison with that of other banks can be made and decision can be taken by the borrower.
2. An acknowledgement will be given for receipt of all loan applications. Time frame within which loan applications up to Rs.2.00 lakh will be disposed of will also be indicated in acknowledgement of such applications. The draft acknowledgement form is enclosed.
3. The loan applications will be verified within a reasonable period of time. If additional details/documents are required, the borrowers will be intimated immediately.
4. In the case of all categories of loans irrespective of any threshold limits, including credit card applications, the Bank shall 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.

Loan appraisal and terms/conditions.

1. It shall be ensured that there is proper assessment of credit application by borrowers and that margin and security stipulation have not been used as a substitute for due diligence on credit worthiness of the borrower.
2. The credit limit along with the terms and conditions thereof shall be conveyed to the borrower and the borrower and the borrower's acceptance of these terms and conditions given with his full knowledge kept on record.
3. Terms and conditions and other caveats governing credit facilities given by the Bank arrived at after negotiation by lending institution and the borrower shall be in writing and shall be duly certified by the authorised Official of the bank. A copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement shall be furnished to the borrower.
4. As far as possible, the loan agreement shall clearly stipulate credit facilities that are solely at the discretion of the Bank including 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. The loan agreements shall specifically state 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.
5. In the case of lending under consortium arrangement, the Bank as one of the participating lenders shall involve itself in evolving procedures to complete appraisal of proposals in the time bound manner to the extent feasible, and communicate the participating Banks' decisions on financing or otherwise within a reasonable time.

Disbursement of loans including changes in terms and conditions

Bank shall ensure timely disbursement of loans sanctioned in conformity with the terms and conditions governing such sanction. Bank shall give notice of any change in the terms and conditions including interest rates and charges etc. Bank shall also ensure that changes in interest rates and charges are effected only prospectively.

Post Disbursement Supervision.

1. Post disbursement supervision by the Bank, particularly in respect of loans up to Rs.2.00 lakh shall be constructive with a view to taking care of any "lender-related" genuine difficulty that the borrower may face.
2. Bank shall give notice to borrowers 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.
3. Bank shall release all securities on receiving payment of loan or realisation of loan subject to any legitimate right or 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 the Bank is entitled to retain the securities till the relevant claim is settled/paid.

General

1. 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 notice of the Bank).
2. 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 and in schemes specifically formulated for women beneficiaries.
3. 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.
4. 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, shall be conveyed within 21 days from the date of receipt of request.

II. Grievance Redressal Mechanism
The Board of Directors shall periodically review the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of controlling offices. A consolidated report of such reviews may be submitted to the Board once in 6 months.