DBOD.No.Leg.BC. 28 /09.07.005/2007-08
Scheduled Commercial Banks / All India Financial Institutions
Guidelines on Fair Practices Code for Lenders - Furnishing copy of loan agreement
refer to our Circular DBOD. Leg. No.BC. 104 /09.07.007/2002-03 dated May 5, 2003 wherein guidelines were issued to banks / FIs for framing the Fair Practices Code
In terms of Para 2 (ii) (c) of the above Circular, banks / FIs were advised that
terms and conditions and other caveats governing credit facilities given by banks/
financial institutions arrived at after negotiation by lending institution and
the borrower should be reduced in writing and duly certified by the authorised
official. Banks / FIs were further advised that a copy of the loan agreement
along with a copy each of all enclosures quoted in the loan agreement should be
furnished to the borrower.
It is understood that some banks are furnishing a copy of the loan agreement only
on request made by the borrowers. In this connection, we advise that not furnishing
a copy of the loan agreement or enclosures quoted in the loan agreement is an
unfair practice and this could lead to disputes between the bank and the borrower
with regard to the terms and conditions on which the loan is granted.
Banks / FIs are therefore advised to invariably furnish a copy of the loan agreement
along with a copy each of all enclosures quoted in the loan agreement to all
the borrowers at the time of sanction / disbursement of loans.
Chief General Manager-in-Charge