Fair Practices Code for Lenders

This code has been adopted by banks for setting out the fair practices expected during lending by banks. The code applies to the following areas---
# application for loan and their processing

it gives the time schedule for acceptance and disposal of the loan application. Reasons for rejection are required to be intimated to the applicant. The borrower is also informed about the fees/charges that are levied according to the nature of loan.
# loan appraisal and terms and conditions

the terms and conditions under which the loan is granted is suitably informed along with copies of documents executed by the borrower, on request, is given. Any changes in interest rates during the loan period is also to be intimated by the bank.
# post disbursement handling


# list of recovery agents.

The detailed information from the above perspective is available to the borrower customer so that there is complete understanding of the loaning process of banks. The borrower also has a responsibility in strictly complying with the terms and conditions in order that the bank’s funds are appropriately utilized for the purpose it is meant. The end use of funds is a critical component of bank lending and is required to be strictly adhered

Banker’s Code of Commitment to Customers

Banker’s Code of Commitment to Customers

It is a voluntary code signed by banks, which lays down standards of fair banking practices to be followed by banks while dealing with individual customers. It is a ready reckoner for customers to know what they can expect from banks in their dealings with them in the following areas---

Current, savings and all deposit accounts,
Pension, PPF accounts,
Collection and remittance facilities
Loans and overdrafts
Foreign exchange services
Currency exchange facilities
Card products
Third party products offered through bank’s networks

The signatory banks have pledged to act fairly and reasonably in all dealings with the customer; to help customers understand the nature of financial products and services being offered and to deal quickly and with care all cases of wrongdoing.
It is a significant tool empowering the customers to get the best possible services from banks in a transparent and satisfactory manner. The banks are committed to publicize this code by making available copies thereof to their customers. All areas of possible conflicts and doubts are covered by this code for the customer to make an informed and considered decision while dealing with banks.
The banks are committed to share with the customers the details of their fees and charges for the different services that are available, the normal time taken for cash receipts and payments, the cheque collection facility and the options available and the procedure to be followed in case of grievance redressal of the customer.
The customer additionally has the right to approach the Banking Codes and Standards Board of India, which is the monitoring agency approved by RBI and participating banks, in case they feel that the bank is falling short of the commitments enumerated in the subject code.

KNOW YOUR CUSTOMER KYC NORMS

Banks are required to comply with KYC norms for allowing customers to operate their accounts. Also the formalities are required to be complied with at the time of opening of accounts for identification of depositors with the objective to prevent banks from being used in any fraudulent or anti social manner.

Customers are expected to cooperate with the banks for submission of all papers/ documents in respect of their identity and residential proof. They should not allow their account to be used for any fraudulent or anti social activity which is on the increase. PAN details are required to be given in respect of transactions above a specified limit. Cash transactions are also not permitted beyond a threshold limit. RBI is insisting on strict adherence of these requirements to prevent money laundering through bank accounts. KYC norms are meant to identify the depositor and his source of funds.

INSURANCE OF BANK DEPOSITS

To protect the interest of depositors there is provision of insurance of bank deposits upto Rs 1 lakh in deposit accounts with banks. The Deposit Insurance and Credit Guarantee Corporation of India insures the deposits with insured banks upto the extent of Rs 1 lakh in each account.

The deposits in different branches of the same bank of an individual depositor are taken together for computing the total value of Rs 1 lakh. However where the depositor has deposits with more than one bank the insurance cover is applied separately for each deposit in different banks. The insurance cover is available for all deposit accounts like savings, current, recurring, fixed deposits etc.

NOMINATION FACILITY

While opening deposit accounts with banks the facility of nomination is provided to minimize scope for harassment at a later date. Settlement of deceased accounts had become a major problem for banks as the legal heirs were complicating the issue. Moreover the rightful owner of the funds in the deceased deposit account was being needlessly harassed for want of clarity in the matter. Nomination in deposit accounts of individuals has therefore become mandatory to mitigate the problems in settlement of deceased accounts.

The depositor may nominate a person to whom the bank may make the payment of the balance in the deposit account in the event of his death. The nomination confers the right upon the nominee to receive the amount in the account of the deceased from the bank. The right of any other person against the nominee is not affected by such payment.
Separate nominations for each deposit account can be made and nominations can be changed any time during the period of deposit. In case of joint accounts all the account holders have to jointly nominate an individual.