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:
Schedule of Charges
Category
(i). Bank Guarantee
including Inland Letter
of Credit.
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.
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Category
(ii). Proposal
Processing Charges #
(Inland & Foreign)
including Scheme
Loans
Charges
Fund Based Limit
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.
2.
3.
4.
5.
Advances against Deposits (LOD and Overdraft against Deposit)
Facilities to Other Banks
Jewel Loans
Bill Negotiations facilities with ILC/FLC backing
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.
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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.
Ø TMB Car
Ø TMB Home
Ø Aggregate of all types of Working Capital Limits above
Rs. 50 lac (limit sanctioned)
Ø 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
SSI
SSI
Amount
Upto Rs.25000/Above Rs.25000/-
Maximum Time Limit
7 working days
4 weeks
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SSI
Other than SSI
Scheme Loans:
TMB Personal
TMB Car
TMB Educational
TMB Home
TMB Traders
TMB Rentals
Upto Rs.5 lac
Above Rs.5 lac
Any amount
6 weeks
6 weeks
Any amount
Any amount
Any amount
Any amount
Any amount
Any amount
1 week
1 week
1 week
1 week
1 week
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%
Cash Credit ( Book
Debts)
Cover Period for
30%
Highly volatile
Commodity.(Rice,
Pulses,oil seeds,
Indigenous oil, etc.,)
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%
20%
25%
Cash Credit ( Book
Debts)
Cover Period for
Food stuffs : 30 - 60
days
Others : 90 - 120 days
25%
30%
Key Loan / Loan against
Ware House Receipt
(Period of Loan - 180
days)
20%
25%
For SSI Units
Cash Credit ( Stock )
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.
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TMB Education for
the loan amount
above Rs. 4.00 lac.
TMB Education
Short-term
TMB Home
TMB Traders
100% collateral
in
the form of
immovable
property, NSCs, Units of UTI, Life Insurance policies etc.
Not insisted.
TMB Doctor
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.
TMB Two Wheelers
Not insisted.
TMB Personal
TMB Rental
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.
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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.
Schedule of Penal Interest
CIRCUMSTANCES APPLICABLE
PERIOD FOR
UNDER WHICH
ACCOUNTS
AND AMOUNT
PENAL INTEREST
ON WHICH
IS TO BE
PENAL
CHARGED
INTEREST IS TO
BE LEVIED
Default in honouring All
On
the
entire
terms and conditions
balance
in
the
of sanction
account
till
regularization.
Accounts remaining
All
unpaid though due
--do-for repayment
Accounts recalled
All
On
the
entire
remaining unpaid
balance
in
the
account till closure.
Accounts where
WORKING
On overdue interest
interest is yet to be
CAPITAL LIMITS
amount.
paid
If interest is not paid
with in 7th of the
month following the
month
for
which
interest is debited
Term LoanOn the amount of
Accounts in which unpaid interest.
repayment has started:
If interest is not paid
within the subsequent
instalment due date
&
Accounts in which
repayment has not
started
APPLICABLE
ABOVE
NORMAL RATE
OF INTEREST
2%
2%
2%
2%
2%
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CIRCUMSTANCES APPLICABLE
ACCOUNTS
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.
Cash Credit &
Overdraft
Non-submission /
delayed submission
of returns under QIS
system
Fund based Working
Capital limits of Rs.1
Crore and above.
Working Capital
limits not renewed
with in the due date.
Working Capital
accounts
If the instalment is
not paid on due dates
Non-payment of
demand bills with in
the stipulated period
Term Loans
Non-acceptance of
usance bills and/or
their non-payment on
due date
Usance Bills
Cash Credit
Cash Credit &
Overdraft
Inland Demand Bills
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.
On
the
entire
outstanding in the
account
till
submission of stock
statements.
On
the
entire
outstanding in the
account from the
beginning of the 7th
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
Exemptions:
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.
2%
1%
2%
1%
2%
2%
2%
2%
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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
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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.