FAIR PRACTICES CODE FOR LENDERS

Banks/Financial Institutions (FIs) were advised that loan application forms in respect of priority sector advances up to Rs.2 lakhs should be comprehensive and should 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, so that a meaningful comparison with that of other banks can be made and informed decision can be taken by the borrower. The above instructions will be applicable to all loan applications in respect of all categories of loans irrespective of the amount of loan sought by the borrower. In the case of small borrowers seeking loans up to Rs. 2 lakhs, bank / FIs have to convey the main regions, in writing, which led to reject the loan applications. On a review, it has been decided that in case of all categories of loans irrespective of any threshold limits, including credit card applications, banks / FIs should convey in writing the main reason / reasons which, in the opinion of the bank / FI have led to rejection of the loan applications.