FAIR PRACTICES CODE I) APPLICATION FOR LOANS & ADVANCES AND SCHEDULE OF CHARGES 1) The bank considers sanction of credit facilities to various types of borrowers, if such a request is received from them. The different types of loan application forms for priority sector advances and non - priority sector advances available with the bank are as detailed below: Nature of Loan Application Small Scale Industries Small Business/Retail Trade Professionals Agriculture Housing TMB Personal TMB Car TMB Education TMB Education - Short term TMB Home TMB Traders TMB Rentals TMB Doctor TMB Two Wheelers 2. Schedule of Charges Payable for Fund Based and Non - Fund Based Limits (including renewal of working capital limits) and Scheme Loans: Category (i). Bank Guarantee including Inland Letter of Credit. Schedule of Charges Charges a. 2.00% of the Guarantee amount / ILC per year + Rs.100/- per Guarantee / ILC. b. If secured by 100% deposit, fixed charges of Rs.100 plus 0.50% of the guarantee amount p.a. is to be levied. In case Bank Guarantee to be issued against 100% deposit exceeds Rs.1 Crore and above, our Managing Director can reduce it further on specific request from the Branches through their Region. Note: 1. If the renewal of bank guarantee is effected before the expiry of claim period, Commission should not be collected again for the claim period at the time of renewal. 2. Additional commission at the applicable rate will have to be levied on the extended period of validity of guarantee due to restraints imposed on banks by court orders, at the instance of customers from meeting their obligation to the beneficiaries when the guarantee is invoked.
2 Category (ii). Proposal Processing Charges # (Inland & Foreign) including Scheme Loans Fund Based Limit Charges 0.50% of Loan Amount * *For Limits below Rs.50000/-: (Minimum Rs.100/- ) *For Limits Rs.50000/- and above: (Minimum Rs.500/- and Maximum Rs.1,00,000/-) Non-Fund Based Limit 0.25% of Sanctioned Limit ** ** (Minimum Rs.250/- ; Maximum Rs.50,000/-) Exemptions: # to be collected upfront. (iii).cheque Purchase (Inland) 1. Advances against Deposits (LOD and Overdraft against Deposit) 2. Facilities to Other Banks 3. Jewel Loans 4. Bill Negotiations facilities with ILC/FLC backing 5. D.R.I, Advances to SHG Direct Linkage and Govt.sponsored Scheme Loans up to Rs.1,00,000/- and Small and Marginal farmers 6. All adhoc/one time limits. For Outstation Cheques Minimum of 55 paise per Rs.100/- with the minimum of Rs.10/- per instrument + Actual Postal charges (if the instrument is not realized within 7 days, Overdue Interest from the eighth day will be collected as per the interest rate applicable for Advances not otherwise specified [presently PLR + 3.5% i.e. 16.50%]) For Local Cheques(including Clearing) Minimum of 11 paise per day per Rs.100/- if the realization takes place on the same day or next day. If the realization takes place beyond 2 days on account of intervening holidays, commission should be charged proportionately for the excess period. (iv). Commitment Charges At the rate of 0.25% per annum on undrawn balance of any Fund based advances of above Rs.2 Crore, provided the extent of such undrawn balance is in excess of 25% of the Sanctioned Limit. Exemption: Advances which are classified as Special Mention Accounts and Non-Performing Loans and Advances. Condition: To be collected at the time of review of account in case of Working Capital Limits and at the time of annual closing in case of Term Loans / Demand Loans.
3 Category (v). Prepayment Charges Charges At the rate of 0.25% on the amount prepaid for the following types of Scheme Loans, and Term Loans. At the rate of 0.25% of the sanctioned amount in case of working capital limits. The cases, where the said Credit Facilities are closed by way of take over by other Banks alone will attract prepayment Charges. However, no prepayments charges will be levied in cases where the credit facilities are closed by the borrower from own sources of funds. TMB Car TMB Home Aggregate of all types of Working Capital Limits above Rs. 50 lac (limit sanctioned) Aggregate of Term Loans above Rs.50 lac (limit sanctioned) with the repayment period of 5 years & above for Business Purpose, if the same is foreclosed within 3 years by way of take over by other Bank. 3. Processing Charges Refundable: The Proposal Processing Charges will not be refunded except when the Loan Application is rejected. 4. Pre - payment Option: a) Interest is charged for the balance outstanding amount in the working capital limits. In the case of term loan, interest will be charged on diminishing balance method. The borrowers are at liberty to remit the amount in excess of the instalment amount already fixed and close the loan account from their own source. In the case of preclosure of loan, no charges are levied by the bank additionally, except those loans come under prepayment charges purview as stated in the point no. 2 above. b) The bank will issue acknowledgement for all the loan applications submitted by the borrowers. The maximum time frame within which the loan application will be disposed of will be indicated on the acknowledgement given to the borrowers. c) To ensure timely financial assistance to the borrowers, the loan applications are processed at the minimum possible time. The time limit for disposal of credit proposal is as follows: Category of Borrower Amount Maximum Time Limit SSI Upto Rs.25000/- 7 working days SSI Above Rs.25000/- 4 weeks
4 Upto Rs.5 lac SSI Above Rs.5 lac 6 weeks Other than SSI Any amount 6 weeks Scheme Loans: TMB Personal Any amount 1 week TMB Car Any amount 1 week TMB Educational Any amount 1 week TMB Home Any amount 1 week TMB Traders Any amount 1 week TMB Rentals Any amount 1 week d) The request for credit facility received from the borrower will be examined and sanctioned with in the time limit. If the loan applications are rejected, the reasons for rejection will be conveyed to the applicant concerned in writing. II) LOAN APPRAISAL AND TERMS / CONDITIONS a) For quick timely dispensation of credit, the bank has delegated discretionary powers to branch managers and executives. The credit proposals are appraised in respect of purpose of loan, income generation capacity, credit worthiness of the borrower, viability of the proposal etc. and processed at our Branches, Regional Offices and Head Office adopting highest standards of appraisal for all the advances with in reasonable time. The bank is assessing working capital limits upto Rs.1.00 Crore (Rs.5.00 Crore for SSI) on the basis of Turnover as per Nayak Committee Recommendations. Limits of above Rs.1.00 Crore (above Rs.5 Crore for SSI will be assessed as per the Conventional Method/Second Method of Lending as per Tandon Committee Norms to arrive the Maximum Permissible Bank Finance/Cash Budget by getting necessary Financial Data and other information from the borrowers. The term loan appraisal is done based on the commercial viability, Technical feasibility, financial viability, Managerial Competence, Debt Service Coverage Ratio, and Debt Equity Ratio etc. Apart from this, special aspects such as the marketing strategy of the unit, inter firm comparison of key parameters of similar units / companies etc. will also be taken into account during appraisal exercise of the project. Minimum Margin for working capital limits: The minimum margin for working capital limits and for high volatile commodities is appended hereunder. Irrespective of Commodity-other than the high volatile goods For Traders / Manufactures & Others Cash Credit ( Stock ) 25% 30% Highly volatile Commodity.(Rice, Pulses,oil seeds, Indigenous oil, etc.,) Cash Credit ( Book Debts) Cover Period for 30% 35%
5 Food stuffs : 30-60 days Others : 90-120 days Key Loan / Loan against Ware House Receipt (Period of Loan - 180 days) 25% 30% For SSI Units Cash Credit ( Stock ) 20% 25% Cash Credit ( Book Debts) Cover Period for Food stuffs : 30-60 days Others : 90-120 days Key Loan / Loan against Ware House Receipt (Period of Loan - 180 days) 25% 30% 20% 25% In the case of FLC limits for import of Timber, the margin to be obtained ranges between 10% and 25%. Based on the borrowers past business performances and financial standing and past account track record, the margin so stipulated may be enhanced or reduced on case to case basis. Collateral Security: The bank generally obtains sufficient and suitable tangible collateral security wherever possible. This is based on risk perception. Collateral security by way of land and building is obtained for fund based as well as non fund based facilities. However, for government sponsored schemes like DRI, PMRY under industry sector projects with cost upto Rs.2.00 lakh etc, collateral security is not insisted as per RBI guidelines. In respect of SSI Borrowal accounts for loans of Rs.5 lac and above the obtention of collateral security is generally insisted upon. The collateral requirement for loans below Rs.5 lac for SSI Borrowers is dispensed with. Under Secured Overdraft Scheme of the bank, tangible and marketable collateral security to cover at least 150% of the limit sanctioned is insisted by the bank. The collateral security requirement for some of the special loan products are as under: Nature of Loan TMB Car TMB Education up to Rs.4.00 lac Collateral Security Not a prerequisite. Not insisted.
6 TMB Education for the loan amount above Rs. 4.00 lac. TMB Education Short-term TMB Home TMB Traders TMB Personal TMB Rental TMB Doctor TMB Two Wheelers 100% collateral in the form of immovable property, NSCs, Units of UTI, Life Insurance policies etc. Not insisted. House / Flat to be financed is taken as Security. Agricultural land is not taken as collateral security. If located in urban area, land and building property to the extent of 150% of the limit and if located in rural area, 200% of the limit is taken as collateral security. Not a pre-requisite. Building property against the rental income of which the loan would be sanctioned. Collateral security is insisted wherever necessary. Not insisted. Interest: The interest rates are linked to Prime Lending Rate of the bank. The present PLR of the bank is 13.00 percent and the maximum spread of 3.5 percent over the PLR is presently prescribed. The cost of deposits, yield on advances and availability of spread are taken into account, while fixing the interest rate on advances. Credit Rating: At present credit rating is done by the bank to assess the counter party credit risk and price the credit based on the borrower s credit rating. Currently, credit rating is made mandatory for the credit limits of Rs.20 lac and above in case of single entity. Eligibility Criteria for Credit Rating: a) The bank communicates the borrowers in writing by way of sanction letter, the terms and conditions of sanction of various credit facilities whether they are fund based or non fund based. The borrower's acceptance or otherwise of the terms and conditions of the sanction will be taken in to consideration. Modifications in the terms and conditions may be considered after receiving such a request from the borrower. b) A copy of the loan agreement along with a copy of all enclosures quoted in the loan agreement will be furnished to all the borrowers on payment of prescribed charges, at the time of sanction / disbursement of loans invariably, as a matter of routine, duly obtaining their written acknowledgement for having received the copies. c) The bank reserves its rights to either sanction or reject the credit applications from the borrowers. The request for enhancement or fresh credit facilities from the existing borrowers will be considered only after taking into account the various aspects like satisfactory account operations, satisfactory financial position, future prospects, viability of the concerned projects, collateral security coverage, etc.
7 d) In the case of large advances, the bank will participate in Consortium Advances along with other banks/ Financial Institutions. In such cases, our bank will process the loan applications within 10-12 weeks. The sanction or rejection of the credit limits required will be communicated to the borrowers in writing. III) DISBURSEMENT OF LOANS INCLUDING CHANGES IN TERMS AND CONDITIONS Keeping in mind the availability of credit at the right time, the bank after ensuring the execution of documents, marketability of title deeds and compliance of terms and conditions, disburses the credit facilities to the needy borrowers within reasonable time. The bank gives notice to the borrowers in writing any change in the interest rate/ service charges/ handling charges. This will enable the borrowers to take an informed decision on the charges collected by the bank. CIRCUMSTANCES UNDER WHICH PENAL INTEREST IS TO BE CHARGED Default in honouring terms and conditions of sanction Accounts remaining unpaid though due for repayment Accounts recalled remaining unpaid Accounts where interest is yet to be paid Schedule of Penal Interest APPLICABLE ACCOUNTS PERIOD FOR AND AMOUNT ON WHICH PENAL INTEREST IS TO BE LEVIED All On the entire balance in the account till regularization. All --do-- All On the entire balance in the account till closure. WORKING CAPITAL LIMITS If interest is not paid with in 7 th of the month following the month for which interest is debited Term Loan- Accounts in which repayment has started: If interest is not paid within the subsequent instalment due date & Accounts in which repayment has not started On overdue interest amount. On the amount of unpaid interest. APPLICABLE ABOVE NORMAL RATE OF INTEREST
8 CIRCUMSTANCES UNDER WHICH PENAL INTEREST IS TO BE CHARGED Balance exceeding drawing power or sanctioned limit (which ever is lower) without sanction Delayed submission / Non-submission of stock statements / Book debts statements. No operations in the accounts for a period of 6 months. Non-submission / delayed submission of returns under QIS system Working Capital limits not renewed with in the due date. If the instalment is not paid on due dates Non-payment of demand bills with in the stipulated period Non-acceptance of usance bills and/or their non-payment on due date Exemptions: APPLICABLE ACCOUNTS Cash Credit & Overdraft PERIOD FOR AND AMOUNT ON WHICH PENAL INTEREST IS TO BE LEVIED On the entire outstanding in the account for the period the account is irregular. Cash Credit On the entire outstanding in the account till submission of stock statements. Cash Credit & Overdraft Fund based Working Capital limits of Rs.1 Crore and above. Working Capital accounts Term Loans Inland Demand Bills Usance Bills On the entire outstanding in the account from the beginning of the 7 th month till regularization. On the entire outstanding in the account till submission of QIS statements. On the entire outstanding in the account till regularization. On the defaulted amount. On the amount of the outstanding for the period of default. On the amount of outstanding for the period of default. APPLICABLE ABOVE NORMAL RATE OF INTEREST 1% 1% The following accounts are exempted from levy of additional interest All priority sector advances upto Rs.25000/-. Advance to sick units which are under rehabilitation programme. All advances under DRI scheme.
9 IV) POST DISBURSEMENT SUPERVISION a) All the cash credit/ key loan godowns are visited and verified by the branch officials periodically in such a way that, it will not affect the day to operations of the business. All the assets hypothecated for the borrowal accounts are subject to inspection by the branch officials once in a month. Apart from the said inspection, all the borrowal accounts having credit limits of Rs.1.00 crore and above are subject to special inspection namely Post Credit Supervision by the Inspecting Officials of our Inspection Department once in 6 months and the actual expenses for the same will be recovered from the borrowers. All the borrowal accounts having working capital limits of Rs.5.00 crore and above are subject to Stock Audit and the actual expenses for the same will be recovered from the borrowers. b) In the case of irregular accounts, the problems faced by the borrower will be examined by the bank and reasonable time will be given to regularize the account before issuing legal notice/ recall notice to the borrower. c) Once all the loan accounts are closed and if there is no direct or indirect liability exists to the borrower, all the securities are released to the borrower after getting permission from the higher authorities. If the borrower has any other direct or indirect liability to the bank, the right of set off will be exercised after giving due notice to the borrower in writing which gives the full particulars about the liabilities of the borrower and the securities available to the bank. V) GENERAL a) Unless the terms and conditions provide for the same, the bank will not interfere in the internal affairs of the borrower. This is not applicable to the borrowers who have not disclosed vital information to the bank which will affect the lending decision. b) In all bank branches, spread throughout our country, financial assistance to the borrowers are sanctioned irrespective of the sex, caste and religion he/she belongs. c) Before initiating recovery proceedings in respect of irregular / NPA accounts, opportunity will be given to the borrowers for regularizing of the accounts. If there is no fruitful recovery, the bank functionaries will take appropriate steps for recovery of the loan in such a way that there is no undue harassment to the borrower. In case of NPA accounts, in addition to regular recovery measures, the bank will proceed either under the SRFAESI Act, 2002 against accounts eligible as per the norms of the Act detailed in our circulars issued in this regard from time to time or initiate legal actions against the borrower by filing suit before appropriate Court/DRT. The Bank has option to proceed under SARFAESI Act, 2002 or through filing suit before Court/DRT or both simultaneously on case to case basis as a measure of expediting the recovery process. d) The bank considers transfer of credit limits to other banks / Financial Institutions, if such a request is received from the Borrower for operative
10 conveniences. The bank conveys its acceptance or objection to the concerned party within 21 days from the date of receipt of request. V) GRIEVANCE REDRESSAL MECHANISM Any borrower who has any grievances on the above can approach our General Manager (Credit), for redressal of the grievance if any in this regard.