Mumbai: The
Reserve Bank of India (RBI) has asked banks and financial
institutions (FIs) to put in place by 1 August 2003, a
fair practices code to be followed in respect of all future
advances. The code should be based on the guidelines issued
by the RBI yesterday.
According to the
guidelines, banks and FIs will have the freedom to draft
the code. However, they may in no way "sacrifice
its underlying spirit."
The guidelines,
which aim at creating a level-playing field for borrowers
and lenders, especially in the wake of the Securitisation
Act, tells banks and FIs to restrain from interfering
in the affairs of borrowers, except to what is provided
in the terms and conditions of the loan sanction documents,
unless new information, not earlier disclosed by the borrower,
has come to the notice of the lender.
Lenders
have been told to refrain from resorting to undue harassment
of the borrower, use of muscle power, etc, during the
recovery of loans, and have also been asked not to discriminate
borrowers on grounds of sex, caste and religion in the
matter of lending.
The apex bank,
however, has said that lenders may continue to participate
in credit-linked schemes framed for weaker sections of
the society.
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