Short title and recital
The code set out below is adopted by Karnataka Vikas Grameena Bank in pursuance of the directions contained in reserve Bank of India Circular No. DBOD Leg. No. BC 104/ 09.07.007/2002-03 dtd. 050.05.2003 shall be called the Fair Practices Code For Lenders Adopted by Karnataka Vikas Grameena Bank (hereinafter referred to as “The Code”)
- Applications for Loans and their processing.
( a) Fees / charges -
Loan application forms in respect of priority sector advances up to Rs. 2 lakhs shall include 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, to enable a comparison with other Banks can be made and to facilitate informed decision by the borrower, as given in Cir.No. 16 / 2005 and subsequent circulars issued in this regard, from time to time.
Acknowledgement should be issued for receipt of all loan applications, as per the specimen given in Annexure-II.
(c) Time frame for disposal :
For loans up to Rs. 2.00 lakhs the said acknowledgement will also indicate the time frame within which the loan application will be disposed off. The loan applications will be verified within a reasonable period of time and if additional details / documents are required , they will be intimated to the borrowers immediately.
( d) Communication of rejection with reasons -
In the case of small borrowers seeking loans up to Rs. 2 lakhs the main reason / reasons which, in the opinion of the Bank after due consideration, have led to rejection of the loan application within the stipulated time will be conveyed in writing to the borrower, as per the format furnished in Annexure III.
3 .Loan appraisal, Terms & conditions
Communication of sanction –
Sanction of the credit limit shall be conveyed to the borrower along with the terms and conditions thereof, for which the borrower’s acceptance of the said terms and conditions given with his full knowledge, should be obtained and kept on record.
4. Disbursement of loans including changes in terms and conditions.
Timely disbursement of loans sanctioned in conformity with the terms and conditions governing such sanctions shall be ensured. Notice should be given in respect of any change in the terms and conditions including interest rates, service charges. Etc. For this purpose a notice on the Notice board of the Bank’s branches and offices, shall be deemed to be sufficient notice. Changes in interest rates and charges will be effected only prospectively.
5. Post disbursement supervision.
Post disbursement supervision –
Post disbursement supervision particularly in respect of loans up to Rs. 2 lakhs shall be constructive with a view to taking care of any “ lender related “ genuine difficulty that the borrower may face.
Recall / Accelerated payment –
Decision to recall / accelerate payment or performance under the agreement or seeking additional securities, lenders shall be preceded by notice to borrowers, as specified in the loan agreement or a reasonable period, if no such condition exists in the loan agreement.
Release of facilities –
On receiving payment of loan or realization of loan subject to any legitimate right or lien for any other claim against the borrower, all securities shall normally be released to the borrower. Where right of set off is to be exercised, borrowers should be given notice about the same with full particulars about remaining claims and the documents under which Bank is entitled to retain the securities, till the relevant claim is settled / paid.
Non interference –
The Bank shall 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.
No Discrimination -
The Bank shall not discriminate on grounds of sex, caste and religion in the matter of lending. However the Bank may participate in credit – linked schemes frame
d for weaker sections of society.
No unfair measures for recovery -
In keeping with its customer friendly traditions, 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.
Issue of No objection Certificate –
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, should be conveyed within 21 days from the date of receipt of request.
To be entitled to the above provisions of the code the borrower shall
- Abide by the assessment of credit application carried out by the Bank and shall not expect the use of margin and security stipulations as a substitute for due diligence on credit worthiness of the borrower.
- Agree and undertake clearly that the credit facilities extended by the Bank are solely at the discretion of the bank. These shall 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 borrowers account on its classification as a non – performing asset or on account of non- compliance with the terms of sanction. It shall also be specifically understood by the borrower that the bank does not have an obligation to meet further requirements of the borrower on account of growth in business etc. without proper review of credit limits.
Acknowledgement ( To be issued in all cases)
- Distinctive serial Number of Loan application:
- Name of the Applicant :
- Date of Receipt of Application for advance :
- Additional details / documents / requirements/Information required.
# Mentioned Below
# Will be informed later
i) ii) iii0 iv) v)
- Time Norms for disposal of loan applications; Will be disposed of by …………………..(To be indicated for applications up to Rs. 2 lakhs only)
Signature of Branch Head.
Karnataka Vikas Grameena Bank, Branch:
Ref. No. Date:
Sub: Your applications for credit facility of Rs.
With reference to the above we would like to inform you that your applications for credit facility could not be considered favourably on account of the following:
- Proposal not viable
- Proposal technically not feasible
- Does not conform to Bank’s benchmarks
- Does not suit the risk perception of the Bank
- Others (Specify)
(i) (ii) (iii) (iv) (v)
Signature of Branch Head.