Sub: Recovery Agents Review of terms of engagement

Transcription

1 MAIN : ADV-04/ DT a SUB : NPA-01 CO: Legal Department FILE M-2 S-208 Sub: Recovery Agents Review of terms of engagement Bank is using a combination of various tools like SARFAESI Action, Lok Adalats, Suits in Civil Courts and DRTs, Arbitration etc. for recovery of Non- Performing Assets. Under SARFAESI Act, Bank is empowered to issue demand notice, take possession of the securities, and effect sale without the intervention of courts. Our Bank has introduced a policy for engaging Recovery Agents (RAs) for assisting us in the recovery of NPAs. Authorised Officers can make use of the services of the Recovery Agents for accelerating the recovery process. Presently we have 52 RAs in our panel, the list being attached herewith for the information of Zonal Offices and Branches (Annexure-I) The terms and conditions for empanelment of the RAs and the commercial terms for their engagement are spelt out in the circular no. ADV-13/ /NPA-32 dated 20/04/2006. Following are the existing guidelines for empanelment of Recovery agents in our Bank. 1. Only Partnership firms or companies are considered for empanelment as Recovery agents. Firms consisting only of members of same family as partners (husband wife; brother sister etc) are avoided as it get the colour of a close family business, and there is no external role play involved which brings in more transparency. This condition is stipulated to ensure that there is a mutual team control, staff strength and necessary infrastructure to culminate in result oriented action. 2. The system of rating the RAs by the Zonal Managers is introduced based on the parameters stipulated in the circular no. Adv. 13 dated Only those who have scored a minimum of 40% marks are recommended for empanelment. The format for the rating the RA is furnished as Annexure II. 3. Recovery Agents should satisfy KYC norms true to the letter and spirit and Partners / Directors in the firm / company or behind the firm / company are not in restricted list or belong to any undesirable category. (Zonal Manager to ensure this before recommending proposals for empanelment of RAs). 4. The partners / directors should have completed the 100 hours training for the Debt Recovery Agents and passed the Debt Recovery Agents Examination conducted by Indian Institute of Banking and Finance, to become eligible for empanelment. The copy of the certificate should be submitted along with the recommendation from Zonal Manager for empanelment. 5. For empanelment, Zonal Manager should interview and identify the recovery agents, based on the parameters given in the annexure II and send their

2 recommendations for approval of General Manager in charge of Recovery and Legal dept. 6. The Recovery Agent has to sign an Agreement with the Bank. The agreement will broadly define the scope of the work to be performed by the Recovery Agent, terms of the offer, and the obligations of the Recovery Agent and the Bank. The proforma of the initial agreement (at the time of empanelment) and subsequent annual renewals are attached as Annexure III and Annexure IV respectively. The agreement between the Bank and the Recovery Agent will be signed / executed by DGM (RL) at Corporate Office, on behalf of the Bank. In the light of broad guidelines evolved and communicated by IBA, our Bank has evolved Model Code on Collection of Dues and Repossession of Securities (CDRS Code) and our Recovery Agents have been advised to adopt the guidelines contained therein to ensure fair practice and transparency. To ensure further the adherance of CDRS code, suitable clauses have been added in the Agreement entered into with Recovery Agents. By and large in our Bank, services of RAs are utilised only in cases where difficulty is encountered in taking possession, vacating tenants, marketing the sale or completion of procedures associated with it etc., The RAs are empanelled for a period of one year and thereafter Zonal Managers will review and recommend for their continuation in the panel based on their satisfactory performance. Corporate office will review their performance based on the data received from Zonal Office and renew the empanelment of the eligible RAs based on the recommendation of Zonal Manager. This exercise is done on an annual basis. All the zones have been advised to ensure that the Recovery Agents strictly adhere and follow the Code evolved, to ward off any complaint. Endeavour should be to entrust mainly the difficult cases/accounts wherein expertise is required, to the Recovery Agents. Branches should keep a portfolio of difficult accounts and not so difficult accounts and entrust the matter to the Recovery Agents accordingly. In the guise of engaging RAs, the branch / zonal office should not lose focus on the recovery of such accounts. Need for RAs and the role play assigned: Authorised Officers are utilising the services of Recovery Agents in the following areas, wherever necessary and where difficulty is encountered in enforcement. Taking possession, drawing inventory, making security arrangements. Identifying bidders to participate in sale, effecting sale. Co-ordinate/liaison with Government Agencies, Municipal Authorities, Registration Authorities. Ascertain particulars of legal heirs of deceased borrower, guarantor, mortgagor and their addresses etc. In accounts where the legal proceedings are taken, their services can be utilised for identifying other assets (Non-EM Properties) of the borrowers/guarantors for 2

3 getting them attached and bringing for sale, liaison with Recovery Officers of DRT, Officials of Courts etc. In the event of there being third party claims, claims made by Govt authorities etc, to ascertain the correct position about the claims so made and work out a practical solution, use their good offices to facilitate compromise etc The services of Recovery Agents are also being utilized even under Non-SARFAESI cases as: 1. Identify whereabouts of secured assets, obtain EC, valuation for the same etc. 2. Ascertain details of other assets of borrower/guarantor so as to attach them through legal process wherein security cover is inadequate. 3. Trace the whereabouts of absconding borrower/guarantor, mortgagor, ascertain the financial standing etc., for attachment of assets possessed by them. 4. Ascertain particulars of legal heirs of deceased borrower, guarantor, mortgagor and their addresses etc., so as to take forward the legal process. 5. Liaison with Government Agencies, Municipal authorities etc and facilitate sale. 6. Liaison with Recovery Officer of DRT, Officials of the Court etc. and ensure expeditious disposal of the case and also expedite sale process through Recovery Officer / EP Court. 7. Coordinate with the registration authorities and facilitate registration of sale certificate without any hassles. Because of the varied activities entrusted to RAs and also to streamline their fee structure in tune with the prevailing market conditions, it is felt that a revision of the fee structure is required to make the same more acceptable for the RAs. Accordingly our Board has approved the revision of the fee structure for the RAs and the terms and conditions for engaging their services, in the meeting held on 16/03/2013, which is furnished as Annexure V. The revised fee structure will come into force with effect from 01/04/2013. However, the work already allotted will continue till completion as per the earlier agreed terms. The fees prescribed are the ceiling limits, but Zonal Managers should negotiate with the RAs and reduce the fees to the extent possible on a case to case basis and specifically arrive at, at the time of entrustment itself, depending on the merits of the case. The fee and expenses incurred towards Recovery Agents, can be realized out of recovery effected, as expenses and thereafter balance may be appropriated towards our loan dues and till such time, the amount may be treated at par with the MLE/MOX incurred for recovery and may be paid accordingly. OTHER TERMS & CONDITIONS: Zonal Managers are delegated with the necessary authority to fix a suitable fee on case to case basis within the overall cap mentioned above. Approval of payment of fees for the recoveries effected by the RAs is delegated to Zonal Managers. Branches should report the details of recovery by the RA to Zonal Manager and seek permission for payment of fees. 3

4 In the event of the Recovery Agent not successful in realizing the dues within 6 months from the date of assignment of an account, the Recovery Agent is not eligible for any fee unless and otherwise for the reasons explained in the policy page no. 1 of Annexure V, paragraph No. (e). This condition should be incorporated in the assignment letter given to the RAs. The Bank will terminate the services of the Recovery Agent for the particular assignment immediately on completion of six months and if necessary assign the account to any other RA for resolution. No advance payment should be made to the Recovery Agents for any assignments given. Payment should be made only on completion of the assignment to the satisfaction of the Zonal Manager. The Recovery Agent shall take steps towards possession of the Assets of the Borrower in a SARFAESI proceeding, only in accordance with the provisions of the SARFAESI Act wherever entrusted. For each asset entrusted to the Recovery Agent, the Zonal Manager will decide the benchmark realizable value. (This benchmark realizable value will be the base for deciding the incentive for recovery over and above the benchmark price.) Monitoring: Every quarter, at Zonal Office level, the performance of all the Recovery Agents to whom accounts have been entrusted, is to be reviewed by the Zonal Manager and a report submitted to Corporate Office for placing the status to the top management. Corporate Office will continue to closely monitor engaging the services of Recovery agents, in the light of detailed guidelines received from RBI/IBA/BCSBI and the code of conduct evolved in this regard for ensuring that these instructions are strictly followed. Zonal Managers and field level functionaries are advised to make use of the revision in fees structure effectively for availing the services of Recovery Agents in hardcore cases and ensure maximum recovery. K Malathy General Manager (R&L) 4

5 ANNEXURE - I INDIAN BANK, CO: LEGAL DEPARTMENT LIST OF RECOVERY AGENTS IN BANK S PANEL (AS ON 31/03/2013) Sl.No Zone Name of the Recovery Agent 1. ARM Zone, Chennai Matex Net Pvt., Ltd 2. ARM Zone, Chennai JVD Recovery Agency Pvt, Ltd 3. ARM Zone, Chennai Shakthi Associates 4. Bangalore P T Security Services 5. Bangalore SI Global Services 6. Bangalore Shree Balaji Clearing Agents (P) Ltd 7. Bangalore Captain Consultancy Services Pvt., Ltd 8. Bhubaneshwar City Investigation & Detective. 9. Bhubaneshwar Regional Investigation Centre. 10. Chandigarh B & B Associates 11. Chandigarh Emm Bee Financial Services Ltd., 12. Chandigarh PGA Professions Ltd., 13. Chennai (S) Charitarth Financial Services Pvt. Ltd 14. Chennai (N) R R Associates 15. Chennai (N) Vishnu Associates 16. Chennai (N) Madras Asset Recovery Company (P) Ltd., 17. Chennai (S) Access Solutions 18. Coimbatore BFI Factoring Services Ltd 19. Ernakulam Privity Service Providers Private Ltd, 20. Guwahati Kanak Choudhury & Associates 21. Hyderabad Aabram Industrial Services 22. Hyderabad Asset Recovery Management Yard Pvt. Ltd 23. Hyderabad Balaji Associates 24. Hyderabad Win Win Financial Services 5

6 25. Kancheepuram Naveen Associates 26. Kolkata Maa Kali Asset Reconstruction Consultancy Services Ltd. 27. Kolkata S D Datta Agency Private Ltd., 28. Kolkata Coax Assets Management Pvt., Ltd 29. Kolkata Roy & Choudhury Associates 30. Kolkata Solve, 31. Lucknow Singh & Singh Legal & Credit Solutions (P) Ltd., 32. Madurai Asia Corporate Services, 33. Mumbai Perfect Recovery Consultancy Pvt. Ltd. 34. Mumbai Geographic Information System (Mumbai) Pvt., Ltd 35. New Delhi AAA Capital Services Pvt. Ltd. 36. New Delhi ARCK Consultants Pvt., Ltd 37. New Delhi Eagle Vision Services P. Ltd. 38. New Delhi Vasuli Recoveries 39. Patna Akash Recovery Services Pvt., 40. Patna Debt Management Services., 41. Patna Seagull Recovery & Educational Consultant 42. Patna Wings Agency & Services Pvt., Ltd. 43. Pudhucherry Vinayagar Enterprises 44. Pune Recovery Management Associates 45. Pune Jagtap Assocites 46. Tirunelveli S M Associates 47. Trichy Salem Consultancy India P Ltd, 48. Vijayawada Monica Financial Links 49. Vijayawada Blue Cops 50. Visakhapatnam Feroun Enterprises 51. Visakhapatnam Sri Santh Recovery Agency 52. Visakhapatnam Professional Investigation Centre 6

7 A ANNEXURE II RATING SHEET FOR RECOVERY AGENTS Name of the Recovery Agent M/s Parameters on which the Recovery Agent is rated Availability of Qualified and skilled personnel Track Record Empanelment with other Banks Availability of Transport facilities Availability of well equipped office with communication facilities Total Marks Maximum Marks Marks Awarded Total score - % 7

8 TO BE STAMPED AS INDEMNITY ANNEXURE - III Format of the Agreement to be entered into with the Recovery Agent (Initial Empanelment) This agreement made at Place/s and date/s mentioned herein below. Between Indian Bank, a Body Corporate incorporated under the Banking Companies (Acquisition & Transfer of Undertakings) Act 1970, having its Corporate Office at., (hereinafter referred to as IB, which expression shall wherever it occurs include its successors and assign) AND M/s (Name of the Recovery Agent) At present carrying on the business at (Address of the Recovery Agent), a (constitution) under the name and style of M/s Name of the Recovery Agent (hereinafter referred to as Recovery Agent (R A) which expression shall wherever it occurs include its successors and permitted assigns) duly represented by their Principal Officer Mr, S/o Mr Whereas IB in the course of its business has from time to time granted Loans to various Borrowers either with or without security. AND WHEREAS the Borrowers to secure their liability under the various loans executed various agreements / documents in favour of I B from time to time. AND WHEREAS the Borrowers have defaulted in repaying the Loans as provided in the relevant agreements /documents. AND WHEREAS, IB is desirous of appointing a Recovery Agent (RA) for the purpose of carrying out and / or exercising powers under SARFAESI Act as an agent of the Authorised Officer and otherwise for the purpose of making realisation / recoveries from / out of the Loans/securities and / or making realisation/ recoveries of the amount due from the borrowers. AND WHEREAS IB is desirous of appointing an agent to effect recovery in all kinds of loans, whether Secured or Unsecured using the available legal tools and whether or not suit/recovery Application is pending. AND WHEREAS pursuant to negotiations between IB and RA, it has been agreed to by and between IB and RA that RA shall be entrusted with the responsibility of such recovery and realisation upon the terms and conditions hereinafter appearing. NOW THIS AGREEMENT WITHNESETH AS FOLLOWS: ARTICLE I Definitions In this Agreement, unless the context otherwise requires, the following terms shall have the meanings set out herein below: 8

9 1. Agreement means this agreement together with all amendments entered into in writing in respect thereof from time to time. 2. Benchmark Realisable value means amount with respect to each asset pertaining to a Borrower entrusted to the R A, as will be indicated to the R A at the time of his engagement. 3. Borrower means the person(s) who have availed of the Financial Assistance, and any other person (s) who has / have created / given any security interest, and / or guarantee, to secure the repayment of any Financial Assistance. 4. Loan or Loans means the loans, guarantees, debenture, and any other funded and non-funded financial assistance availed of by the Borrower (s) from IB, together with interest, compound interest and all other monies whatsoever stipulated in, or payable by the Borrower to IB in respect thereof ( Financial Assistance ), together with any security interest created to secure the repayment of such Financial Assistance. 5. Legal Expenses shall mean professional service charges, other expenses including court fees, valuation fees, et., paid / payable to advocates, lawyers, solicitor, legal consultants, in respect of cases and proceedings before appropriate judicial and quasi-judicial authorities for the purpose of recovery / realisation of the Loans, security interest and also includes for defending in any proceeding (s) in relation thereto against IB and / or Agent (as the constituted attorney of IB, appointed in accordance with this Agreement) and the fees/expenses paid/payable to R A. 6. Recovery Agent means acting as an Agent of IB for carrying out and / or exercising all powers under SARFAESI Act and / or otherwise for making realisation / recoveries from/ out of the loans including undertaking all legally permissible recovery strategy for the purpose of making realisation/ recoveries from / out of the loans/securities and / or realising / recovering amounts due to the Bank from the borrowers / Guarantors or any third party. 7. Recovery means with respect to each Loan, the aggregated amount of realisation/ recoveries made in respect of the said Loan by the RA. 8. SARFAESI Act means the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and includes any rules, regulations, directions or guidelines issued thereunder from time -to-time, as the same may be amended, substituted or re-enacted from time-to-time. 9. Secured Assets, Security Interest have the meaning assigned to the said terms under SARFAESI Act mutatis mutandis for the provisions of this agreement also. ARTICLE II 1. IB hereby appoints Recovery Agent and Recovery Agent hereby accept the appointment as IB s Agent for the purpose of recovery / realisation of Loans by one or more of the methods mentioned in Clause 2 below. 2. Recovery Agent shall make recovery / realisation in respect of the Loans by one or more of the following methods, viz. a) By sale of the Secured Assets either as one lot or as strip sale b) By invoking the provisions of SARFAESI Act (it is however clarified that Recovery Agent will only act as an Agent of the Authorised Officer nominated by the Bank for exercising powers under SARFAESI Act, 2002.) 9

10 c) To render assistance to the Recovery Officer and assist in the Recovery process, be it through the Debts Recovery Tribunal or any other Court of Law, or Tribunal or other appropriate forum, d) By such other means or action decided in consultation with / with the consent and under the overall supervision and direction of authorised representative of Bank in writing. ARTICLE III Commercial Terms: The fees payable for the recoveries will be as follows: Table (a) Amount payable on the amount realized on Recovery sale of assets Recoveries up to $1.00 lakh 10 % Above $1.00 lakhs and up to $10,000/- plus 6 % over and $25.00 lakhs Above $1 lakh Above $25.00 lakhs and up to $154000/- plus 5 % over and $ lakhs Above $ lakhs Above $100 lakhs $529000/- plus 3 % over and Above $ 100 lakhs **The total fee payable per account is capped at $15.00 lakhs (b) Unsecured Loans: - For Salary loans, personal loans etc. where no security is available the fee payable is fixed at % of the recovery. (Revised from 2.50%) The total fee payable under this category shall not exceed $10.00 lakhs. (C) Incentive for recovery over and above the benchmark price : When the recovery effected is more than 150% of the benchmark price, an incentive of 5% will be paid for the amount recovered over and above the 150% of benchmark price. This incentive is capped at $ 5.00 lakhs. (Same as existing policy) However this is payable only when our liability is more and entire proceeds will be adjusted to our loan account. (d) Incentive for recovery of long pending NPAs: To give more thrust to the recovery of long pending NPAs we may offer an additional fee of 2% for recovery of NPAs aged more than FIVE years. (e) When account is closed under OTS or proceedings stayed by DRT / Other Courts after assigning to Recovery Agent: Generally assignments should be given to Recovery Agents for doing all necessary activities so as to result in recovery / resolving the matter to its logical end. In case, after the initiation of the recovery process by the Recovery Agent, the account is settled by OTS or the recovery proceedings are stayed, the fees payable to the Recovery agent is fixed at 1% of the amount offered as OTS, subject to a maximum of $ 5.00 Lakhs. In the categories (a), (b) and (e), the out of pocket expenses that may be incurred by Recovery Agent, will be reimbursed by Bank on declaration basis, subject to a maximum of r 10, 000/- (Rupees Ten thousand only) in any particular account. This 10

11 amount will be paid only if concrete steps have been taken/substantial progress has been made by the Recovery Agent in the recovery process. Seizure: Fee structure for seizure of vehicles / tractors etc. is given below. (f) For seizure of tractors / vehicles, besides actual expenses, fee of $ 5,000/-. (g) For scouting for bidders and arranging sale, a fee of $ 5,000/- can be paid if sale materializes and recovery is effected. ARTICLE IV Representations and Warranties 1. R A and IB hereby represent that they are duly incorporated validly existing and in good standing under applicable laws; 2. R A further represents that it has full corporate power and / or authority to enter into this Agreement (relevant only for R As who are companies and not for partnership firms); and 3. R A further represents and warrants that it shall discharge its duties and functions in accordance with all applicable laws, rules, regulations and directives. Further, that it shall not undertake any activity which is unlawful, illegal and shall take utmost care to ensure that no damage is caused to the assets and Bank is not exposed to any adverse publicity / claims from borrowers / guarantors / third parties for their not following the legally permissible means / procedures. In taking such measures, it shall be ensured by Recovery Agents that Principles of Natural Justice and the guidelines laid down in Indian Bank Model Code for Collection of Dues and Repossession of Securities (CDRS Code) is adhered to. 4. The R A shall take steps towards possession of assets of the borrower in a SARFAESI proceeding only in accordance with the provisions of SARFAESI Act. ARTICLE V Powers and Duties 1. The relationship between IB and the R A shall be of principal and agent and all decisions taken by IB in respect of any settlement / compromise offer shall be final and binding on the R A. 2. The R A is required to perform in consultation with / with the consent and under the overall supervision and direction of Authorised Officer /representative of IB in writing and all decisions taken by the Authorised Officer / representative of IB shall be binding on the R A. 3. The R A is required to maintain confidentiality of customer information received by them from the Bank during the period of contract and also after termination/expiry of the term 11

12 of the contract. This obligation of confidentiality shall continue to be binding and applicable without any limit in point of time, except and until such information enters the public domain. The R A shall not disclose any confidential information or any materials derived there from the Bank to any other person or entity other than the persons who have a need to access and knowledge of the said information solely for the purpose of facilitating / expediting recovery, viz., in the nature of giving publicity for the intended sale, making discreet enquiries about the guarantor/mortgagors, procuring prospective bidders, etc. and/or only with the express written consent of the Bank. Upon termination / expiry of the term of the contract and upon written demand from the Bank the R A shall return copies of materials / extracts/ notes, etc. received form the Bank within 7 days of receipt of notice and comply with all the obligations thereto. If the R A commits breach of the said terms of the contract pertaining to confidentiality and adoption of CDRS code, as a consequence of which the Bank is put to irreparable harm/damage, the Bank is entitled to pursue all remedies provided at law or in equity, besides termination of contract forthwith without any further notice. 4. The R A may, where considered necessary, obtain within 7 days hereof loan files and other documents being maintained by IB (the particular branch) in respect of the Loans and prepare an index of documents / files so acquired and send a copy of such index for IB s (to the particular branch) records. The Recovery Agent shall take such measures as may be necessary for ensuring safe keeping of all the documents /files so acquired and shall take an insurance cover against fire, theft and other applicable policies from an insurance company acceptable to IB. 5. The R A shall take such measures as may be necessary to identify potential buyers of the property / security, possession of which has been taken / will be taken under the SARFAESI Act or otherwise, to ensure quick recovery / realisation of the Assets. 6. All realisation /recoveries from the Borrowers shall be by way of Demand Draft / Pay order drawn in favour of such bank account as may be indicated by IB in writing and shall be forwarded to IB within 3 working days from the date of recovery and / or realisation or at such intervals as may be prescribed by IB in writing. The R A shall not accept any cash / or cheque in their favour from the borrowers / Guarantors. All amounts recovered / realised by Recovery Agent under this Agreement shall be remitted to IB without any deduction whatsoever. R A shall not have any lien / right of set off against IB in respect of the amounts realised / recovered under this Agreement. 7. The R A shall evaluate and obtain within a period of fifteen (15) days from the date of engagement, insurance for the secured assets and / or renew the insurance for the secured assets in the name of IB, if not already insured / renewed. Bank s prior approval is required if obtaining insurance cover is not found necessary. Also, the R A shall take all such steps as may be necessary to ensure protection and preservation of such assets, including deployment of security personnel. The R A shall be responsible for the safe custody of the secured assets of which the R A takes possession. 8. The R A shall submit a monthly status report and such other information as may be prescribed by IB from time-to-time. 9. The R A undertakes and affirm that Bank as well as RBI official has a right to conduct audit periodically and during the course of inspection / audit conducted by authorised inspecting officials of the Bank and RBI, R A shall provide access to all our records / 12

13 books / documents, to facilitate effective and meaningful inspection of our performance and at the same time ensure that there is no breach of confidentiality of customer information. 10. The R A undertakes and solemnly affirms that R A shall not resort to engaging subagents. R A agrees that they have no authority to engage sub-agents / sub-contractors and the same shall not be done without express prior consent / approval of the Bank. 11. The R A agrees that if there is any breach of the said terms of the contract on their part as a consequence of which the Bank is put to irreparable harm/damage, the Bank is entitled to seizure of the incriminating records / documents in R A s custody and pursue all remedies provided at law or in equity, besides termination of contract forthwith without any further notice. 12. The R A undertakes to impart training to all our Partners / Employees in accordance with RBI directives and obtain certificate thereof. R A agree to produce the certificate to the Inspecting officials of the Bank, as and when called upon to do so. 13. For each asset entrusted to the RA, a Bench Mark realisable value will be decided by I B. If the amount realised by sale of assets through the recovery agent is equal to or more than the Bench Mark Realisable Value, then only the Recovery Agent is eligible for his fees. 14. Settlement involving deferred payment over a period of time shall be with the prior approval of the IB. R A shall submit a settlement proposal indicating the settlement amount, schedule of payment and the sources from which payment would be made, for consideration of IB. 15. The R A shall also be required to take actions / measures as stated in Schedule hereto in addition to the above mentioned duties. ARTICLE VI Miscellaneous 1. The R A shall indemnify and save harmless IB, its successors and assigns, against any and all losses, damages, liabilities, suits, claims, counterclaims, actions, penalties, expenses, IB shall suffer as a result of : (a) (b) (c) any breach of Recovery Agent s warranties, representation, covenants, undertakings or agreement contained herein; any failure on the part of the Recovery agent to observe or perform in any respect, any covenant or obligation or undertaking under this Agreement; or Any claim made by the Borrower or any third party pursuant to which a court has passed an order and / or decree against IB on account of any action or omission of the R A in relation to the loans secured assets and / or the Borrower. Both the parties shall not be liable for any failure to perform any of its obligations under this Agreement if the performance is prevented, hindered or delayed by a Force Majeur Event (defined below ). Each party shall promptly inform the other of the existence of a Force Majeur Event and shall consult together to find a mutually acceptable solution. Force Majeur Event means any event due to any cause beyond the reasonable control 13

14 of the Party, including, without limitation, fire flood, explosion, acts of God, civil commotion, strikes, riots, insurrection, war or Acts of Government. 2. This Agreement shall be valid up to twelve months from the date of this agreement and may be extended by mutual consent for such period and on such terms and conditions as may be agreed between the parties in writing. This Agreement can be terminated forthwith by either party for breach of any of the term of this agreement by issue of 15 days notice to the other party. In the event of termination of the agreement, Recovery Agent will hand over possession of the movable / immovable assets, along with all the relative documents, etc. to the Authorised officer / representative of the Bank or any other person / agency identified by the Bank. 3. In the event of the Recovery Agent not successful in realising the dues within a reasonable period say 6 months from the date of engagement as Recovery Agent for any particular account, the Recovery Agent is not eligible for any fee. The Bank at will terminate the services of the Recovery Agent for the particular assignment and any advance payment made to the Recovery Agent has to be refunded to I B fully. 4. IB and Recovery Agent hereby agree that they shall work together to resolve any disputes that may arise under this Agreement. In the event that disputes do arise under this Agreement, which the Parties are unable to settle amicably, the dispute shall be settled by arbitration pursuant to the Arbitration and Conciliation Act, The place of arbitration shall be./ or (the place where the agreement will be executed) and the language of arbitration shall be English. The Parties shall jointly appoint a sole arbitrator. 5. This agreement has been executed in duplicate, duly stamped in accordance with law, each of which constitute one and the same instrument, the original to be retained by IB and the counterpart to be retained by the R A. 6. All communication and notices by the Recovery Agent to IB shall be in writing and may be addressed by facsimile, registered AD, courier to IB at the following address : 7. All communication and notices by IB to the R A shall be in writing and may be addressed by facsimile, registered AD, courier to the R A at the following address : Name and Address of the Recovery Agent Schedule [Jobs / Functions to be entrusted to the Recovery Agent listed herein are in addition to already covered in the text. The following is the illustrative list and not exhaustive] Recovery Agent is required to perform the following jobs / functions on behalf of the Authorised Officer/ Bank in connection with enforcement of security interest under SARFAESI Act : Assist in taking possession of movable and immovable properties, as an agent of the Authorised Officer/Bank, in full compliance with the procedure laid down under the Rules : Assist the Authorised Officer/bank in preparing the Panchnama, inventory of the property, etc., as per procedure and forms prescribed; Arrange on behalf of the Authorised Officer/Bank, for storage, maintenance, preservation and locking up arrangement, as appropriate of the movable / fixed / immovable assets so taken over; Arrange on behalf of the Authorised Officer/Bank, for security, insurance, and / or any other action required to ensure safety of all the assets taken over; 14

15 Assist the Authorised Officer/Bank in sending notices to debtors of the borrower follow up collection; Assist the Authorised Officer/bank in arranging for valuation as per procedure laid down; Assist the Authorised Officer/Bank in arranging for sale of the assets as per any of the modes prescribed; Assist the Authorised Officer/Bank in making arrangement as regards in receipt of sale proceeds, issue of sale certificate and all other necessary formalities prescribed. Arrange for eviction of unauthorised occupants in the secured assets by taking up with appropriate authorities like CMM/DM etc. Also listed below is the duties expected to be performed by the Recovery Agent: Follow up with the borrower / guarantor; Arranging for buyers of assets / properties pledged / hypothecated / mortgaged / or otherwise charged to the Bank; Collecting details of the personal properties of the borrowers / guarantors and exploring the feasibility of bringing them to sale; Arranging for marketing Bank s schema for compromise / one time settlement with borrowers / guarantors if requested by IB; Restructuring / Rehabilitation including Mergers and Acquisition if requested by IB; Outright Sale; Such other means as the RA may decide in consultation with the IB, in writing, for unlocking funds in NPAs. [The above is only an indicative list and if any other action is required to be taken by RA, those may be listed here.] IN WITNESS WHEREOF the parties have signed these presents Agreement on the date, month and year as hereinafter appearing: Signed and delivered by the within name Authorised Officer / Representative, Indian Bank by the hand of Signed and delivered by the within name Authorised Officer / Representative of the Recovery Agent by the hand of Witness: 1 Witness: 2 15

16 TO BE STAMPED AS INDEMNITY ANNEXURE - IV Format of the Supplementary Agreement to be entered with the Recovery Agent for renewal This agreement made at Place/s and date/s mentioned herein below. Between Indian Bank, a Body Corporate incorporated under the Banking Companies (Acquisition & Transfer of Undertakings) Act 1970, having its Corporate Office at., (hereinafter referred to as IB, which expression shall wherever it occurs include its successors and assign) AND M/s (Name of the Recovery Agent) At present carrying on the business at (Address of the Recovery Agent), a (constitution) under the name and style of M/s Name of the Recovery Agent (hereinafter referred to as Recovery Agent (R A) which expression shall wherever it occurs include its successors and permitted assigns) duly represented by their Principal Officer Mr, S/o Mr WHEREAS, IB and R A have entered into agreement dt. which was holding a validity period of six / twelve months as the case may be (Principal Agreement) whereby the R A was to assist the Bank in the matter of recovery of NPAs of the Bank using the legal process. The earlier agreement lapsed with effect from.. and both parties agreed that certain additional terms have to be incorporated. Therefore IB and the R A desirous of reducing the terms thereof in writing. NOW THIS AGREEMENT WITHNESETH AS FOLLOWS : ARTICLE I IB hereby agrees to renew the agreement dt.. executed with Recovery Agent and Recovery Agent hereby accept the renewal as IB s Agent for the purpose of recovery / realisation of Loans by one or more of the methods already covered under the earlier agreement. The term of the said agreement is extended for a further period of... years. All terms and conditions of the principal agreement remain unchanged. R A shall perform the job / assignment entrusted effectively and facilitate recovery through valuable services. 16

17 ARTICLE II Commercial Terms The fees payable for the recoveries will be as follows: Table (a) Amount payable on the amount realized on Recovery sale of assets Recoveries up to $1.00 lakh 10 % Above $1.00 lakhs and up to $10,000/- plus 6 % over and $25.00 lakhs Above $25.00 lakhs and up to $ lakhs Above $1 lakh $154000/- plus 5 % over and Above $ lakhs Above $100 lakhs $529000/- plus 3 % over and Above $ 100 lakhs **The total fee payable per account is capped at $15.00 lakhs (b) Unsecured Loans: - For Salary loans, personal loans etc. where no security is available the fee payable is fixed at % of the recovery. (Revised from 2.50%) The total fee payable under this category shall not exceed $10.00 lakhs. (C) Incentive for recovery over and above the benchmark price : When the recovery effected is more than 150% of the benchmark price, an incentive of 5% will be paid for the amount recovered over and above the 150% of benchmark price. This incentive is capped at $ 5.00 lakhs. (Same as existing policy) However this is payable only when our liability is more and entire proceeds will be adjusted to our loan account. (d) Incentive for recovery of long pending NPAs: To give more thrust to the recovery of long pending NPAs we may offer an additional fee of 2% for recovery of NPAs aged more than FIVE years. (e) When account is closed under OTS or proceedings stayed by DRT / Other Courts after assigning to Recovery Agent: Generally assignments should be given to Recovery Agents for doing all necessary activities so as to result in recovery / resolving the matter to its logical end. In case, after the initiation of the recovery process by the Recovery Agent, the account is settled by OTS or the recovery proceedings are stayed, the fees payable to the Recovery agent is fixed at 1% of the amount offered as OTS, subject to a maximum of $ 5.00 Lakhs. In the categories (a), (b) and (e), the out of pocket expenses that may be incurred by Recovery Agent, will be reimbursed by Bank on declaration basis, subject to a maximum of r 10, 000/- (Rupees Ten thousand only) in any particular account. This amount will be paid only if concrete steps have been taken/substantial progress has been made by the Recovery Agent in the recovery process. 17

18 Seizure: Fee structure for seizure of vehicles / tractors etc. is given below. (f) For seizure of tractors / vehicles, besides actual expenses, fee of $ 5,000/-. (g) For scouting for bidders and arranging sale, a fee of $ 5,000/- can be paid if sale materializes and recovery is effected. ARTICLE III Representations and Warranties Besides the representation and warranties contained in the earlier agreement dated. It is further agreed and covenanted as under: R A represents and warrants that it shall discharge its duties and functions in accordance with all applicable laws, rules, regulations and directives. Further, that it shall not undertake any activity which is unlawful, illegal and shall take utmost care to ensure that no damage is caused to the assets and Bank is not exposed to any adverse publicity / claims from borrowers / guarantors / third parties for their not following the legally permissible means / procedures. In taking such measures, it shall be ensured by Recovery Agents that Principles of Natural Justice and the guidelines laid down in Indian Bank Model Code for Collection of Dues and Repossession of Securities (CDRS Code) is adhered to. The R A shall take steps towards possession of assets of the borrower in a SARFAESI proceeding only in accordance with the provisions of SARFAESI Act. The R A is required to perform in consultation with / with the consent and under the overall supervision and direction of Authorised Officer /representative of IB in writing and all decisions taken by the Authorised Officer / representative of IB shall be binding on the R A. The R A is required to maintain confidentiality of customer information received by them from the Bank during the period of contract and also after termination/expiry of the term of the contract. This obligation of confidentiality shall continue to be binding and applicable without any limit in point of time, except and until such information enters the public domain. The R A shall not disclose any confidential information or any materials derived there from the Bank to any other person or entity other than the persons who have a need to access and knowledge of the said information solely for the purpose of facilitating / expediting recovery, viz., in the nature of giving publicity for the intended sale, making discreet enquiries about the guarantor/mortgagors, procuring prospective bidders, etc. and/or only with the express written consent of the Bank. Upon termination / expiry of the term of the contract and upon written demand from the Bank the R A shall return copies of materials / extracts/ notes, etc. received from the Bank within 7 days of receipt of notice and comply with all the obligations thereto. If the R A commits breach of the said terms of the contract pertaining to confidentiality and adoption of CDRS code, as a consequence of which the Bank is put to irreparable harm/damage, the Bank is entitled to pursue all remedies provided at law or in equity, besides termination of contract forthwith without any further notice. 18

19 The R A may, where considered necessary, obtain within 7 days hereof loan files and other documents being maintained by IB (the particular branch) in respect of the Loans and prepare an index of documents / files so acquired and send a copy of such index for IB s (to the particular branch) records. The Recovery Agent shall take such measures as may be necessary for ensuring safe keeping of all the documents /files so acquired and shall take an insurance cover against fire, theft and other applicable policies from an insurance company acceptable to IB. The R A shall submit a monthly status report and such other information as may be prescribed by IB from time-to-time. The R A undertakes and affirm that Bank as well as RBI official has a right to conduct audit periodically and during the course of inspection / audit conducted by authorised inspecting officials of the Bank and RBI, R A shall provide access to all our records / books / documents, to facilitate effective and meaningful inspection of our performance and at the same time ensure that there is no breach of confidentiality of customer information. The R A undertakes and solemnly affirms that R A shall not resort to engaging subagents. R A agree that they have no authority to engage sub-agents / sub-contractors and the same shall not be done without express prior consent / approval of the Bank. The R A undertakes and affirms that all the personnel in the firm / company have completed the mandatory hundred hours training stipulated by RBI and has obtained necessary certificate thereof. R A undertakes to produce the certificate to IB as and when called upon to do so. R A also affirms that any guidelines issued by RBI from time to time will be adhered to. The R A agrees that if there is any breach of the said terms of the contract on their part as a consequence of which the Bank is put to irreparable harm/damage, the Bank is entitled to seizure of the incriminating records / documents in R A s custody and pursue all remedies provided at law or in equity, besides termination of contract forthwith without any further notice. This renewal shall be valid for a period of. years/ months from the date of this agreement and may be extended by mutual consent for such period and on such terms and conditions as may be agreed between the parties in writing. This Agreement can be terminated forthwith by either party for breach of any of the term of this agreement by issue of 15 days notice to the other party. In the event of termination of the agreement, Recovery Agent will hand over possession of the movable / immovable assets, along with all the relative documents, etc. to the Authorised officer / representative of the Bank or any other person / agency identified by the Bank. All other terms and conditions of the principal agreement dt not specifically covered herein will continue to be binding and applicable on both parties. This Agreement has been executed in duplicate, duly stamped in accordance with law, each of which constitute one and the same instrument, the original to be retained by IB and the counterpart to be retained by the R A. 19

20 IN WITNESS WHEREOF the parties have signed these presents Agreement on the date, month and year as hereinafter appearing under their signatures: Witness 1 Witness 2 Signed and delivered by the Authorised Officer / Representative, Indian Bank by the hand of Signature with seal Signed and delivered by the Authorised Officer / Representative of the Witness 1 Witness 2 Recovery Agent by the hand of Signature with seal 20

21 ANNEXURE V REVISED FEE STRUCTURE FOR RECOVERY AGENTS (The revised fees will come into force with effect from 01/04/2013) Table (a) Revised Amount payable on Recovery Existing fee structure the amount realized on sale of assets with effect from 01/04/2013** Recoveries up to $ % 10 % lakh Above $1.00 lakhs and $10,000/- plus 6 % over and up to $25.00 lakhs Above $25.00 lakhs and up to $ lakhs $10, 000/- plus 5 % over and above $ 1 lakh Above $100 lakhs $5.05 lakhs plus 3 % over and above $100 lakhs Above $1 lakh $154000/- plus 5 % over and Above $ lakhs $529000/- plus 3 % over and Above $ 100 lakhs Besides the fee payable, actual expenses shall be reimbursed on production of bills/receipts towards salary of security guards, advertising expenses etc., **The total fee payable per account is capped at $15.00 lakhs (Revised from Rs lakhs) (b) Unsecured Loans: - For Salary loans, personal loans etc. where no security is available the fee payable is fixed at % of the recovery. (Revised from 2.50%) The total fee payable under this category shall not exceed $10.00 lakhs. (C) Incentive for recovery over and above the benchmark price : When the recovery effected is more than 150% of the benchmark price, an incentive of 5% will be paid for the amount recovered over and above the 150% of benchmark price. This incentive is capped at $ 5.00 lakhs. (Same as existing policy) However this is payable only when our liability is more and entire proceeds will be adjusted to our loan account. (d) Incentive for recovery of long pending NPAs: To give more thrust to the recovery of long pending NPAs we may offer an additional fee of 2% for recovery of NPAs aged more than FIVE years. (Newly introduced) (e) When account is closed under OTS or proceedings stayed by DRT / Other Courts after assigning to Recovery Agent: Generally assignments should be given to Recovery Agents for doing all necessary activities so as to result in recovery / resolving the matter to its logical end. In case, after the initiation of the recovery process by the Recovery Agent, the account is settled by OTS or the recovery proceedings are stayed, the fees payable to the Recovery agent is fixed at 1% of the amount offered as OTS, subject to a maximum of $ 5.00 Lakhs. (Same as existing fee structure) In the categories (a), (b) and (e), the out of pocket expenses that may be incurred by Recovery Agent, will be reimbursed by Bank on declaration basis, subject to a 21

22 maximum of r 10, 000/- (Rupees Ten thousand only) in any particular account. Zonal Managers may ensure that this amount may be paid only if concrete steps have been taken/substantial progress has been made by the Recovery Agent in the recovery process. The above is applicable to all recovery assignments which are withdrawn at any stage viz. identification, demarcation of property, taking physical possession, scouting for buyers etc. Seizure: (New addition) Fee structure for seizure of vehicles / tractors etc. is given below. (f) For seizure of tractors / vehicles, besides actual expenses, fee of $ 5,000/-. (g) For scouting for bidders and arranging sale, a fee of $ 5,000/- can be paid if sale materializes and recovery is effected