The tenure of the empanelment shall be 2 (two) years. Renewal in deserving cases shall be considered by competent authority at Zonal Office.

Transcription

1 BANK S POLICY FOR ENGAGEMENT OF OUR BANK S RETIRED EMPLOYEES AS RECOVERY OFFICERS (RERO) FOR RECOVERY OF BANK DUES IN NPA ACCOUNTS HAVING BALANCE UP TO RS. ONE CRORE Bank s Board in its meeting held on has approved Policy for engagement of Bank s own Retired Employees as Recovery Officers (RERO) for recovery of Bank dues in NPA accounts having balance up to Rupees one crore. Accordingly, Bank has issued Instruction circular No /Recovery/12-13/4 dated The salient features of the Policy are as under:- 1. Scope of Work of Retired Officers All activities relating to Recovery like follow up in DRT and other Courts, SARFAESI measures, auction sale, settlement negotiations, etc. will be done by the Retired Employee Recovery Officer (RERO).However, the authorized Officer issuing all notices under SARFAESI will be the designated officer from the Bank. 2. Guidelines for the appointment/ removal of RERO A. Eligibility Criteria for Empanelment Retired Bank Officers (including Voluntarily Retired Officers), who have not been Dismissed/ Removed/ Compulsorily Retired from the Bank & who have the requisite experience in recovery and who have the ability to act independently in issues relating to settlement, litigation etc. B. Process of appointment All Zonal Offices will invite applications on the prescribed format from the Retired Bank Officers (including Voluntarily Retired Officers), A copy of the retirement letter issued by HO has to be enclosed with the application. Zonal Offices will scrutinize all the applications, ensure that they are properly filled & will forward these applications with their views and recommendations to their Field General Manager for taking final view in the matter by FGMLCC. For empanelment of RERO, FGMLCC will approve the name of RERO. After final approval of names of RERO by competent authority, FGM office will advise the approved list to respective Zonal Office for issuance of Letter of empanelment to selected REROs The process of empanelment will be a running one, with names, if found suitable, being added to the list with approval of the competent authority as and when it is found expedient to do so. The tenure of the empanelment shall be 2 (two) years. Renewal in deserving cases shall be considered by competent authority at Zonal Office. This panel shall be circulated to all the Zonal Offices for the utilization of their services for resolution of non performing accounts under the scheme. List of finally selected penal will also be placed on Bank s Web site.

2 C. Terms& Conditions for Empanelment of Bank s Retired Employees as Recovery Officers (RERO) &Best Practices Code to be Observed by RERO for Recovery of Bank dues in NPA Accounts I. Bank will engage RERO for recovery in NPA accounts, tracing borrowers /guarantors, locating properties charged to bank, locating uncharged properties of borrowers /guarantors, to assist the Authorised Officer in enforcing various actions under SARFAESI Act 2002, & others and other jobs/action related to recovery in loan accounts. II. For above functions, separate Authorization letter (Account wise or number of accounts clubbed together) will be issued to Bank, which will be shown by RERO to the concerned borrower/guarantor on RERO s very first meeting with them. III. Payment of commission/fee/remuneration by the bank will depend upon size / outstanding in NPA account, Age of NPA & actual recovery made by RERO in NPA accounts allotted to RERO for recovery purpose by the Bank. The following shall be the commission/fee/remuneration structure: Ledger Balance Outstanding For Ledger Balance of up to Rs. 1 lakhs For Ledger Balance above Rs. 1 lakh and upto Rs. 50 lakh Above Rs. 50 lacs & upto Rs. 1 crore If age of NPA is up to 3 years 8.00% of amount 7.00% of amount 6.00% of the amount If age of NPA is above 3 years 10.00% of amount 9.00% of amount 8.00% of amount IV. In all the above categories there will a cap of Rs. 1lac per borrower towards commission/fee/ remuneration. Any other statutory levies will be deducted by Bank. All inflow (Cash Recovery) into the allotted NPA account after 15 days from date of allocation will be construed as inflow by the REROs and commission/fee/ remuneration will be paid accordingly. V. Fee payable to RERO will be finalized by the Zonal Head with RERO before entrusting any of the above jobs. Fees/service charges agreed with RERO for each account will be mentioned in relevant Authorization letter to be issued to RERO, by Zonal Office. Please note Fees/service charges once finalized cannot be changed. VI. Fees/service charges finalized will be inclusive of all charges/expenses of RERO. Payment (Fees/service charges) will be made preferably on recovery of entire Bank dues & RERO s declaration of exhausting all efforts in recovery in a particular account. VII. Fee bill will be paid in accordance with the agreed terms and after deducting TDS, as per prevailing IT Rules.. VIII. For resolution /recovery of accounts expenses for taking possession, Insurance charges, Valuation & Security charges after taking the possession by Bank/Official Liquidator/DRT Receiver, legal expenses on eminent Counsel in High Courts and charges relating to auction shall be borne and paid directly to the concerned agency by the Bank. In exceptional circumstances, when a counsel of eminence is appointed for High Court/ Supreme Court matters where the reputation of the Bank is at stake, the additional expense may be approved by the Bank. IX. Empanelment of RERO is initially valid for period of two years, however its renewal on year to year basis will depend on RERO s performance & compliance of Best

3 Practices Code of conduct & other terms & conditions mentioned in Service Agreement to be executed by RERO. X. RERO s empanelment can be cancelled /withdrawn by the Bank at any time without assigning any reason. XI. A RERO shall be allocated maximum 25 accounts and based on their performance number of accounts may be increased by the Bank. XII. Maximum period for resolution of allocated accounts shall be 12 months from date of its allotment to RERO. If RERO fails to recover the amount, accounts will be taken back from him. However, above period can be further extended by the Bank depending upon merits of the case, keeping in view the steps taken by the RERO for recovery XIII. Allotment of NPA accounts for recovery to RERO will be the sole prerogative of the bank. Without assigning any reason bank can withdraw any of the NPA accounts allotted to RERO for recovery. XIV. In allotted accounts in case RERO found that any Credit facility was sanctioned /renewed by them when they were in service or borrowers or guarantors are related to RERO then they will immediately inform the Bank, about such accounts so that they can be withdrawn from them by Bank. XV. Zonal Office, through branch concerned will provide RERO the information related to dues of the borrower (Outstanding Ledger Balance plus Uncharged interest up to the last day of the month preceding that in which the account will be assigned to RERO, and costs, if any) complete address of borrowers/ co-obligants and details of suit filed and charged securities, attachments (if any), claim lodged with the liquidator in case of liquidation or claims lodged with official assignee in case of insolvency of the borrower/guarantor. XVI. RERO shall ensure that while acting on behalf of the Bank, they do not give rise to any pecuniary liability to Bank otherwise they shall be held liable for their action. XVII. The REROs shall not receive cash from the borrowers. They will rather persuade the borrowers to deposit the cash at the branch. A statement of account of the recoveries in the accounts allotted to REROs duly certified by the Branch Head, shall be submitted by the REROs on quarterly basis to the Zonal Office. XVIII. As per the directions of RBI/IBA/Bank s Policy details of all RERO will be placed on Bank s web site. XIX. Empanelment / engagement of RERO by Bank does not construe employment i.e. employment in the Bank in any manner whatsoever. XX. No borrower /guarantor will be promised /assured by RERO for approval of compromise sum offered by them, release of charge on security & issue of no dues certificate without getting approval of compromise sum from the competent authority of the Bank. XXI. The borrowers/ guarantors will not be discharged/ exonerated by RERO on behalf of bank in any way from their liability individually, jointly or severally. XXII. The borrowers/ guarantors will be asked by RERO to make all payment towards recovery directly to the branches where the loan account is maintained against valid receipts and acknowledgement. No amount in cash or in any manner will be collected from the borrowers / guarantors. XXIII. The bank will not be held liable to bear any cost, expenditure in the event of any untoward incidents leading to litigation etc. on account of illegitimate/ coercive action if any by the RERO & or borrower/ guarantor. Therefore all necessary precautions should be taken in this regard. XXIV. Bank shall not be held responsible for any loss or legal action that may arise due to any kind of correspondence/ recovery action taken against borrowers/guarantors by RERO.

4 XXV. The existing employees / officers of the bank or any of their family Members will not be associated RERO in any manner in his RERO activity. XXVI. If RERO will not acknowledge empanelment letter issued by Bank & execute required service agreement within 7 days of receipt of empanelment letter, then offer of empanelment given by the Bank to RERO will be automatically treated as withdrawn. XXVII. RERO empanelled by bank for recovery of bank s dues shall have to comply with & adhere to the following guidelines / code of conduct in the spirit of Best Practices Code prescribed for the Bankers to avoid any untoward incidents. a) Borrowers/guarantors would be contacted ordinarily at the place of their choice and in the absence of any specified place at the place of their residence in case of retail customers, for others either in place of their business or their residence as the case may be. b) Identity and authorization of the RERO along with telephone & mobile numbers would be made known to the borrowers/guarantors at very first meeting itself. c) Customers privacy would be respected. d) Interaction with the borrowers/guarantors would be in their familiar language e) Customer s calling time / meeting time would be normally between hours and hours unless the special circumstances warranted otherwise. f) Customers requests to avoid calls at a particular time or at a particular place would be honored as far as possible. g) Borrowers/guarantors would be provided with all the information regarding total dues payable to the Bank. h) Copy of the demand notice issued by bank to the borrower/guarantor and the authorization letter issued by the bank to the RERO; have to be carried by RERO along with their Identity Proof while visiting Borrower/Guarantor. i) Guidelines/codes on loan recovery process as mentioned in RBI Circular numbers (a) DBOD.Leg.No.BC.104/ / dated May 5, 2003 regarding Guidelines on Fair Practices Code for Lenders (b) Circular DBOD.No.BP. 40/ / dated November 3, 2006 regarding outsourcing of financial services, (c) Master Circular DBOD.FSD.BC.17/ / dated July 2, 2007 on Credit Card Operations (d) paragraph 6 of the "Code of Bank's Commitment to Customers" (BCSBI Code) and latest guidelines issued or to be issued by RBI /GOI/ IBA pertaining to collection of dues will be meticulously adhered to. j) Reserve Bank of India / Ministry of Finance Officials / any Government official can inspect the books of accounts /all records of the outsourced agencies (RERO) empanelled by the Bank. k) For recovery of Banks dues & or seizure of assets charged to the bank (including vehicles & other moveable assets) only legal remedies will be relied upon/ under taken. While enforcing security or sale/ auction of charged assets all the rules / regulations / procedures under the relevant statutes & also mentioned in the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the Security Interest (Enforcement) Rules, 2002 as amended from time to time will be strictly adhered to. l) All guidelines to be issued by IBA / RBI /Government of India / Bank from time to time during the period of empanelment will be strictly complied with. A. Legal requirements for appointment Each RERO shall be required to execute Service Agreement containing the terms and conditions including Indemnity Clause. Draft of the Service Agreement will be as approved by the Legal Department, Head Office and will take into cognizance RBI

5 guidelines on Fair Practice Code for Lenders, guidelines on managing risk and Code of Conduct in outsourcing of Financial services by the Bank, IBA model code for collection of dues and repossession of security (CDRs Code), and the decision of Supreme Court in the matter of ICICI Bank Ltd. Vs Prakash Kaur & others. On receipt of list of approved penal of REROs from FGM Office, Zonal Office will call/invite REROs to their Offices for execution of above referred Service Agreement & completion of other formalities. On behalf of the Bank, the Service Agreement will be signed by GM/DGM/ AGM/ Chief Manager (any two officials) of the Zonal Offices. Properly executed Original Service Agreement will be kept at Zonal Offices. B. Process of removal If Zonal Head is of the opinion that services of a RERO are not satisfactory and has to be discontinued before expiry of his/her term then they will submit the proposal with due recommendations and reasons thereof, to FGM Office which in turn will refer to FGMLCC at FGM Office. The decision arrived at will be communicated by FGM office to Zonal Office which in turn will communicate to respective RERO. 3. Allocation of accounts A. Following eligibility criteria are to be seen for allocation of accounts to RERO. (i) NPA accounts categorized as Doubtful / Loss whether non suit filed, suit filed or decreed accounts shall be covered under the Scheme. (ii) A borrowal account in which any case is pending before a Court / DRT / BIFR / action under SARFAESI, may also be considered for allocation under the Scheme. (iii) In case of written off accounts, outstanding balance at the time of write off, shall be taken as Notional outstanding. (iv) Borrowal accounts having outstanding ledger balance of 1 crore and above are not to be assigned to RERO. (v) The borrowal accounts where non funded facilities are yet to be crystallized are not to be allocated B. Criteria and allocation of accounts to RERO Allocation of accounts will be done by Zonal Head taking into consideration the guidelines viz., the proximity of the RERO s residence to that of the borrower/ the place of business of the borrower, RERO s previous experience with similar type of borrower, chronic nature of the account and traceability of borrower / guarantor identification of their other assets etc. However FGM will supervise the allotment of accounts from time to time to ensure proper distribution & allotment of accounts to all approved REROs. Allotment of NPA accounts for recovery to RERO will be the sole prerogative of the bank. Without assigning any reason bank can withdraw any of the NPA accounts allotted to any RERO for recovery C. The following qualifications are to be noted for allocating accounts to the RERO i. Limit for number of Accounts to be allocated A RERO shall be allocated maximum 25 accounts and based on their performance; number of accounts may be increased by the Allocating Authority. ii. Period for resolution of accounts Maximum period for resolution of allocated accounts shall be 12 months. If RERO fails, accounts will be taken back. However, same can be extended for a further

6 period of 12 months by respective FGM on merits of the case, keeping in view the steps taken by the RERO for recovery. D. The following safeguards are to be followed: (i) Borrowers/co-obligants shall be informed of the engagement of RERO at the time of assigning the job for resolution to the concerned RERO. (ii) RERO shall ensure that while acting on behalf of the Bank, they do not give rise to any pecuniary liability to Bank otherwise they shall be held liable for their action. (iii) The REROs shall not receive cash from the borrowers. They will rather persuade the borrowers to deposit the cash at the branch. (iv) A statement of account of the recoveries in the accounts allotted to REROs duly certified by the Branch Head shall be submitted by the REROs on quarterly basis to the Zonal Office. (v) Accounts which RERO has sanctioned / renewed any facilities, while being in service at the Bank will not be allotted to him. (vi) The borrower/guarantor should not be related to RERO. (vii) All NPA accounts of a particular borrower will try to be allotted to the same RERO. Zonal Office/Branch are advised that information in respect of the connected accounts, if any, be brought to the notice of the RERO, at the time of allocation of accounts (viii) Accounts already allotted to Recovery Agents will not be assigned to REROs. (ix) Accounts which are assigned to ARCs or under active consideration of Sale to ARCs will not be allotted to REROs. (x) Accounts already allotted to ARC to assist the Bank in recovery process will not be assigned to REROs. 4. Sanction & Payments of Bills of RERO REROs will submit bills for payment of their commission directly to the branches. After proper scrutiny the branches will forward the bills to Zonal Offices with their recommendation. At Zonal Offices the bills will be scrutinized, and sanctioned as per guidelines in force in the policy. Only on the receipt of the said sanction, fees / service charges will be paid by the branches to the respective RERO by debiting Charges A/c Commission paid to RERO (BGL number 83481) & Service Tax on it is to be paid debit to Charges Account Service Tax Paid on commission paid to RERO (BGL number 89527). Payment will be made after deducting all the taxes which are applicable & same will be paid either through direct credit in RERO account (by transfer/through NEFT/RTGS) or through Bankers Cheque. Branches will keep the record of above payments account-wise in a separate Register. The said expenditure will be claimed / incorporated as legal expenses in all demand notices and also while considering compromise proposal & filing recovery suit at any court / submission of suit claim to DRTs etc if so warranted in respect of any account. 5. Expenses to be borne by the Bank: For resolution /recovery of accounts expenses for taking possession, Insurance charges, Valuation & Security charges after taking the possession by Bank/Official Liquidator/DRT Receiver, legal expenses on eminent Counsel in High Courts and charges relating to auction shall be borne and paid directly to the concerned agency by the Bank. In exceptional circumstances, when a counsel of eminence is appointed for High Court/ Supreme Court matters where the reputation of the Bank is at stake, the

7 additional expense incurred may be approved by the General Manager (Recovery) at Head Office, after the expenses is expressly recommended by the Zonal Head. 6. Disposal of complaints lodged against RERO Branch, Zonal Office, FGM office & Head Office can receive the complaint from Borrower /guarantors against RERO. All the four offices will properly maintain the proper record of receipt & disposal of such complaints. These complaints will be dealt in the following manner at different levels. a) Branch Level If any branch receives any type of complaint from borrower / guarantor against RERO engaged by Bank or against recovery process adopted by RERO, then besides its early redressal, they must forward copy of the said complaint and Action Taken Report on it to their respective Zonal Manager. b) At Zonal Office Level Zonal Office can receive complaint/ grievances directly or through their branches. Such complaints will be scrutinized /investigated /dealt by the Zonal Office and they must forward copy of the said complaint and Action Taken Report on it to Head Office Recovery Department. c) At FGM Office Level FGM Office can receive complaint/ grievances directly or through their branches/ Zones. Such complaints will be scrutinized /investigated /dealt by the FGM Office and they must forward copy of the said complaint and Action Taken Report on it to Head Office Recovery Department. d) At HO Level Head Office can directly receive complaint/ grievances or through Zonal Offices. Such complaints will be scrutinized /investigated /dealt by the Head Office Recovery Department. General Manager (RR) will take the final view in the matter under advice to Zonal Office and concerned complainant. 7. Periodical review of performance of RERO All the Branches availing services of REROs for recovery of Banks dues in NPA accounts will submit monthly progress report on RERO. Zonal Head should periodically (at least quarterly) review account wise performance of all the REROs empanelled by Bank for recovery of Banks dues in NPA accounts. They will compile the evaluation report & submit its brief to FGMO on Quarterly basis. FGMO will submit the Annual Review Report to H.O. Recovery Department. The schedule for submission of annual review of last financial yearat various levels is as under: a) Zone to FGMO latest by the end of April month. b) FGMO to HO- by the end of May month. c) Head Office to BOARD-By the end of July month. Where ever Zonal Heads get the information from any Zone/branch or he himself feels that concerned RERO is not taking active part in recovery of Bank s dues in respect of those accounts allotted to him & or not adhering to BCSBI Code& various guidelines issued by RBI/ Government of India/Bank, then as advised above matter will be immediately referred to above mentioned committee who will decide about continuance of empanelment of said REROs.If that committee decides for

8 cancellation of empanelment then their empanelment will be cancelled with immediate effect under intimation to concerned borrower/guarantor & Head Office. Head Office Recovery Department will upload the list of the REROs engaged by the Bank in the Bank s internet site. 8. Inspection/Audit of Commission/Service Charges paid to REROs All the record pertaining to Commission/Service Charges paid to REROs is subject to Inspection/Audit by the Head Office Inspectors/FGM Office/Zonal Office Officials/Management Auditors/Other external Auditors. If any discrepancy is observed by any of the above referred Auditor/Inspector, then it has to be immediately brought to the knowledge of Head Office Recovery Department which would later initiate action in the matter.