Guidelines on Fair Practices Code for Lenders - Furnishing copy of loan agreement
Reserve bank of India has issued guidelines to banks / FIs for framing the Fair Practices Code for Lenders in 2003 and modifications were issued later also.
2. In terms of the 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.
However, RBI has come to know that some banks are furnishing a copy of the loan agreement only on request made by the borrowers. In this connection, RBI has reitrated on 22nd August 2007 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.
4. Banks / FIs are therefore advised by RBI 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.
RBI Guidelines (2007) on Fair Practices Code for Lenders ... Click here
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