DCB Fair Practice Code - Assets

On the basis of recommendations of the working group on Lenders Liability laws constituted by the Government of India, RBI has issued guidelines for introducing Fair Practices Code for lenders and advised to adopt broad guidelines and frame the fair practices code for individual banks duly approved by their respective Board of Directors. Based on these guidelines, the following will be the fair practices code for the Bank :

1. Loan application forms shall have information about the fees/charges, if any, payable for processing, the amount of such fees refundable in the case of non acceptance of application, 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.

2. Loan applications shall be properly acknowledged. If all the required information and documents are made available, the proposal for facilities upto Rs. 5.00 lacs shall be disposed off in 2 week’s time and others not exceeding 4 weeks.

3. The bank should 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 he above stipulated time.

1. Margin and availability of security shall not be substitute for due diligence on credit worthiness of the borrower.

2. All terms and conditions shall be transparent in the sanction communication and acceptance thereof by the borrower shall be kept on record, along with loan/security documents.

3. A copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement should be furnished to the borrower.

4. The borrower shall be communicated of credit facilities that are solely at the discretion of lenders. 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 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 or where the bank has reached the peak of exposure on the client.

The sanctioned limits shall be disbursed without any delay after documentation formalities are completed and all the terms and conditions of sanction are complied with. Any changes in terms and conditions, including interest rates, service charges etc. shall be notified to the borrowers/guarantors immediately. Such changes shall only have a prospective effect.

Adequate notice to be given to borrowers before taking decisions to recall/accelerate payments or performance under the agreement or seeking additional securities.

All the securities shall be released on receiving payment of loan or realization of loan subject to any legitimate right or lien for any other claim the bank may have against the borrower. If such right of set off is to be exercised, the borrower 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.

Interference into the affairs of the borrower shall be restricted only to the extent provided in the terms and conditions of the sanction, unless new information, not earlier disclosed by the borrower, has come to the notice of the Bank, which warrants further interference.

There shall not be any discrimination on the grounds of sex, caste and religion in lending.

Borrowers shall not be unduly harassed in the recovery process.

The consent or otherwise [NOC] for transfer of account at the request of borrower or of a bank/financial institution shall be conveyed within 21 days from the date of receipt of such request.

Borrowers’ complaints shall be examined by the Head-Corporate Banking and escalate them to MD, in case of need. Disposal of any serious complaints which has been escalated to MD shall be informed to the Board as a consolidated report once in a quarter.

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