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Shyamala Ravi   17 January 2018

Formal loan application a rbi requirement for loan in bank?

Have learnt a lot from merely browsing these forums and my sincere thanks to those experts who give so freely of their time.  Can someone please tell me if a Bank can merely approve a loan for a huge amount based on a letter from a borrower, and not any formal application?  And this is a nationalized bank.  I had applied for a loan, and distinctly remember filling out a formal application, which copy Bank is not releasing, but is instead providing me a copy of my letter as my 'Application'. Is there a requirement for the Bank to provide me a copy of my FORMAL application, and how do I go about procuring this copy?  This is a nationalized bank. 

Thank you very much.  Regards.



Learning

 16 Replies

G.L.N. Prasad (Retired employee.)     17 January 2018

If the Bank has given such 'Acceptance in principle" letter, they must have added in such letter 'Subject to terms and conditions'.

Such acceptance is different from regular sanction and can not bind the bank as mandatory to lend you as demanded.

However, you can file RTI Application and can seek certified copies of  both the application and in principle sanction given by them. Search websie of the bank o locate Cenral Public Information officer under RTI segment.

Application dt 17th Jan, 2017 seeking information under RTI Act filed

 

Before: CPIO,.............Bank,...........................

Fee: Indian postal order No....for Rs.10/- drawn in favour of ............Bank payable at......

Applicant:

Subject on information sought: In principle sanction letter given vide ref. no.................dt...............to.........................................by.........................Branch IFSC Code No.................

1.Please provide me certified copies of application obtained for providing in principle sanction letter, and such sanction letter provided to applicant.

 

Applicant.

1 Like

Kumar Doab (FIN)     17 January 2018

GO thru the SOP that might be available at website of the bank.

RBI issues guideliens from time to time e.g;

1. INTRODUCTION

This Master Circular provides a framework of the rules/regulations/instructions issued to Scheduled Commercial Banks on statutory and other restrictions on loans and advances.

Banks should implement these instructions and adopt adequate safeguards in order to ensure that the banking activities undertaken by them are run on sound, prudent and profitable lines.

https://rbi.org.in/scriptts/BS_ViewMasCirculardetails.aspx?id=9902

1 Like

Kumar Doab (FIN)     17 January 2018

BCSBI had also issued guidelines on documents whose authenticated copy should be supplied to borrower….

https://www.bcsbi.org.in/FAQ_Lending.html

 

What information is a bank required to give when one approaches them for a loan?

Banks, along with the loan application form are required to provide full information about the interest rates applicable, whether floating or fixed as also fees and charges payable for processing, penal rate of interest for delayed payments, conversion charges for switching loans from fixed to floating rates and vice-versa, existence of any interest reset clause, time by which a decision on the application will be conveyed to the applicant and any other matters which will affect your interest as a borrower.

How will I know if the bank has sanctioned my loan?

Sanction or otherwise of loan applications is required to be intimated by the bank to the applicant in writing.

Will the bank give the borrower copies of the documents / loan agreement he has executed while availing the loan?

Banks are required to give the borrower authenticated copies of all the loan documents executed by him / her along with a copy each of all enclosures quoted in the loan document.

1 Like

Shyamala Ravi   19 January 2018

Originally posted by : G.L.N. Prasad
If the Bank has given such 'Acceptance in principle" letter, they must have added in such letter 'Subject to terms and conditions'.

Such acceptance is different from regular sanction and can not bind the bank as mandatory to lend you as demanded.

However, you can file RTI Application and can seek certified copies of  both the application and in principle sanction given by them. Search websie of the bank o locate Cenral Public Information officer under RTI segment.

Application dt 17th Jan, 2017 seeking information under RTI Act filed

 

Before: CPIO,.............Bank,...........................

Fee: Indian postal order No....for Rs.10/- drawn in favour of ............Bank payable at......

Applicant:

Subject on information sought: In principle sanction letter given vide ref. no.................dt...............to.........................................by.........................Branch IFSC Code No.................

1.Please provide me certified copies of application obtained for providing in principle sanction letter, and such sanction letter provided to applicant.

 

Applicant.

Thank you so very much for your kind response.  Apologize for this late acknowledgment since I did not think anybody would have responded so soon!  I am a foreign citizen of Indian origin, who was in India on a tourist visa, when I entered into this loan arrangement.  The Bank refuses to give me a copy of the formal loan arrangement, providing me instead my own initial letter to them, and telling me that that is what the consider as the loan application.  My doubt is whether the RBI would even accept this as a formal loan application, since an application has to be consistent for all applicants.  Also, as a foreign national could I even apply to get a copy of my formal loan application through RTI since I thought that this was for Indian citizens only.  Also, even if I were to apply through the RTI route what if the Bank simply furnishes my letter to them as the loan applicaiton?  Thank you very much in advance for your response. 

Shyamala Ravi   19 January 2018

@Kumar Doab:  Thank you so very much for the information provided.  I was unable to open the link to the RBI website, but the BCSBI is very useful.  From the portion that you had extracted it appears like the Bank has to provide me with the formal application form, and not merely the letter requesting a loan which they claim is THE application form.  I do have a letter of arrangement that I had signed with the Bank detailing the interest rates etc., but they did not give me a copy of my applicaiton during that time, and they are not willing to do so now.  Is there any way that I can compel them to do so? 

The BCSBI seems to be more of an advisory organization, with no consumer redressal mechanism.  Am I right in this?

Thank you very much.

G.L.N. Prasad (Retired employee.)     19 January 2018

You can provide a letter to any friend or relative addressed to the name of the Bank, that as a representative of yours at your request, Shri.................is making the RTI Application in his name, and there is no objection from you to provide that personal information of yours to your authorised representative and to accept this as under Sec.11 of RTI Act on providing third party information to a citizen to be obtained from third party for his comments.  Let him file RTI Application in his name and he will scan the reply and send it to you.   The procedure is absolutely legal as per RTI Act.

As far as RBI/SBI is concerned you may prepare the above application and make modifications in the format to suit any requirement and ask your friend to seek information from RBI/SBI as required by you.   As a citizen, that information in public domain has to be provided as certified copy and every citizen has such right to get that information under RTI Act.

The problem is that members do not provide basic inputs while seeking query.  Without such bare minimum details, providing precise guidane is difficult.  What is your exact issue ?

1 Like

Shyamala Ravi   19 January 2018

@G.L.N. Prasad:  My grateful thanks for all your advice.  The reason why I did not provide all details is both because it is cumbersome, bizzare and may even appear paranoid!  My experience has shaken to the foundation my faith in our banking establishment, especially our nationalized banks, whom I thought were meticulous in what they do.  Due to the events of the past few years I have become thorough with the Sarfaesi Act and RDDBI Act, and the various case Laws.  I have learnt not to Trust even those who are sworn to watch out for and protect the interests of their clients - like lawyers.  I have learnt that the Presideng Officers of the DRT sometimes behave like extensions of the Bank, and one can prevail only in DRAT or the High Court.  (Which I have, but the Bank can be relentless)

I am the victim of a well orchestrated property grab operation by unscrupulous Bank officials in collusion with certain builders.  The property in question is my inheritance, and located in perhaps the poshest area in a State in the South.  I have been driven to a state wherein I want to fight back, yet scared of repercussions about what can be shared in a public forum and to what extent.  Having lived abroad for a significant period of my life, I have come to trust in the system, in the inherent decency of human beings, and that due process would be followed.  My motherland shocks me and my experience has colored my perception of this great nation. 

I have found out the innumerable violations of the Sarfaesi Act, which will be adjudicated in the DRT.  It was then that I thought that I will focus on the Banking aspects of the loan.  What I have unearthed so far has been shocking, and from the limited documents I have been able to procure so far.  It has been a set up from the get go, with crucial documents mysteriously disappearing or unable to be found.  One of which is the formal Application form that I filled.  This would have shown that I had applied for a simple mortgage loan, but I was instead provided with a Cash-Credit loan under the SME Segment with Reduction in Drawing power under Women Entreuprenuers.  I am an IT professional, with NO building experience, or entreprenuer background  Term was for 23 months, with a clause allowing for Bank to extend the term two more times (23 months each).  Just a month after the loan was given, I was relentlessly hounded both by Bank and their agents to enter into a 'Joint Development' with a Builder.  That I would otherwise be unable to finish my building, manueur the bureaucracy etc.,  We had an excellent Team of Architects, Structural Engineeres, Labor Contractors, etc., The building started going smoothly, .....I do not wish to bore you with the details, for I do not know how much of it is necessary.  For credibility's sake, when my case was appealed in the High Court the Hon'ble Judge was aghast, and had refered to the Bank as "someone dealing in real estate business", recorded his "anguish", and once again refered to the Bank maintaining positions which have "relevance only in real estate dealings". 

My quest now is to unearth wrongdoings by the Bank from the application process and violating pretty much ALL conditions in their Letter of Arrangement with me.  I am not clear as to how this would help me, except for a gut level belief that it woudl force the Bank to negotiate with good faith.  As examples:

1. The Original Loan applicaiton is not being produced by the Bank.
2.  Charging me for regular monthly, periodic and random inspections, and producing a single sheet of inspection report signed by the same person with the same ink and in such a neat column manner that it is evident it was hastily put together, and inspections done a number of times for FUTURE dates.  This too was incomplete. 
3.  Selling away ALL of the raw materials at the site, steel rods, cement, wood, centering materials etc., eventually emptying out the building, and now claiming that there is no inventory present, even while charging me for expensive security for guarding the premises.  Their own Panchanama belies their now claim.
4. Can an SME loan even be given to a foreign national on a tourist visa?  I believe that they ought to have gotten some kind of RBI clearance for the same.  My entire 'loan' was processd in 8 days, and no PAN card, KYC, etc., was required of me.

There are too many things, and too depressing to recount.  This is a nationalized Bank!  If this can happen to an educated lady, who is willing to fight, what about the happless thousands of people who simply do not have the werewithal, stamina or patience to fight?  We hear a lot about NPA's in Banks.  How many of them are due to wanton actions by the Bank to force NPAs for various reasons? 

There has got to be a way sir.  There has got to be a better way, and there has got to be a forum where such eggregious grievances can be brought to light!  I can't do it on my own!  People think that just because I have a property in that particular place I have to be loaded with money!  This is not the case, and it just happened that this was from my grandfather.  I hope to win, or perhaps the Bank will prevail because they are big, have unlimited resources, and the system is stacked in their favor. 

Thank you very much. 

 

G.L.N. Prasad (Retired employee.)     20 January 2018

I am sorry,  I never heard such a story and unable to believe.  Whether Big or Small, every bank fears law like any other individual.  Now that you have posted this large post, there must be some smoke.  But, higher authorities can never be admant and they can only forward facts to competent authority and only implement directions.  The remedy is only with High Court.

1 Like

Shyamala Ravi   21 January 2018

@GLN Prasad:  This is precisely the reason why I withheld information which I felt was mere noise, and did not provide any context to the information that I was seeking - namely attested copy of my original apllicaiton to the Bank. Also, you mention that I should approach the High Court.  In the instance where I approach the High Court, the High Court did side with me, and gave me relief. At that time I was not aware of all the other wrong doings by the Bank.  The proper forum to adjudicate Sarfaesi issues is the DRT and the DRAT.  Only when I do not get remedy in these two forum, or if I seek relief that cannot be provided by these two forum can I approach High Court.  The DRT seems to routinely reject every one of my IA's, and then I have to appeal to the DRAT which allows my IA.  The Bank follows this up by dragging their feet and still not providing me with information.  The loan outstanding was ONE EIGHTH of the value of the property. 

What I am seeking are ways and means that is outside of the beaten DRT track where the Bank has an upper hand.  Precisely, I sought a means by which I can force the Bank to give me a copy  of my Formal Application, which you and Shri Kumar Doab has kindly provided.  This is only to procure docmentation as to the Bank's wrong doing.  Other than this are there other forum where I can get remedy for?  Perhaps the RBI for violatoin of their guidlines?  Perhaps women's rights forum for help with violation of my rights as a lady?  Is there some kind of SME regulatory body who can look into abuse of the SME Act?  To even get a copy of the bid details of the successful bidder, I had written 14 reminders to the Bank and copied to thier higher up, with NO response.  Only after the DRAT ordered them did I get the document. 

You make a mention about how you find it 'unable to believe'.  To what extent could I disclose anything in a public forum to lend credibility?  The Bank thought that I would leave the country in a few weeks and it would be a cake walk for them.  I am a Project Management Professional, and was able to execute the building with the proper team.  When the Bank refused to extend my loan and refused to accept interest payments and I started getting calls from the AGM to return the entire money or sell it this 'good' builder who would give me top rate, that is when I returned to India, got my OCI card and started fighting the Bank.  Some friends have adviced me to write the Prime Minister, others have said I should contact the External Affairs Minister.  But I am not sure it is of such a critical thing that I should do so! 

If I were to recount how they were able to use the Sarfaesi law behind my back, and without serving ANY  notices, and totally keeping me in the dark, I fear that this would actually give other unscrupulous elements a chance to do so if they do not already know. 

I thank you all for all your help.  For the first time I have been able to ventilate somewhat on a public forum, and that is a reward in itself.  Somewhere out there, some one knows the expedient solution to my problem, which will turn this asymetric situation in my favor.  I am reminded of a Christian hymn we used to sing during our school days "Heavens morning breaks, and earth's vain shadows flee".  I do hope that I would be able to see the dawn for the problems I have been facing with this Bank. 

Thank you.

Pankaj Yadav (MT)     21 January 2018

File and RTI with the relevant CPIO and ask for photocopies of all documents you need.Xtrack GPS Tracker

1 Like

Shyamala Ravi   21 January 2018

@Pankaj Yadav:  Thank you for your advice.  I will pursue the same.

I am wondering if it is proven that there is no formal application, wrong type of loan given etc., whether I can pursue the same at Consumer Forum for deficiency of service or since Sarfaesi was invocked the only remedy is with the DRT/DRAT? 

Frankly I would very much like for alternate agencies to investigate/adjudicate the matter since the DRT seems to be weighed in favor of the Bank, and especially this particular one.  Not a single favorable order, and EVERY one of it overturned on appeal by DRAT! 

Kumar Doab (FIN)     21 January 2018

RBI;

Master Circular - Loans and Advances – Statutory and Other Restrictions

RBI/2014-15/64

DBOD.No.Dir.BC. 16/13.03.00/2014-15

 

July 1, 2014

https://rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9024

Kumar Doab (FIN)     21 January 2018

The Code Compliance Officer in the bank an be approached.

Governor RBI can be approached;

governor@rbi.org.in

CEPD;RBI may help;

Chief General Manager

Consumer Education and Protection Department

Reserve Bank of India

1st Floor, Amar Building

Sir P.M. Road,

Mumbai-400 001.

 

Ph;22630483

 

Fax;22631744

cgmcepd@rbi.org.in

 

https://m.rbi.org.in/commonman/english/scriptts/departments.aspx#CEPD

1 Like

Shyamala Ravi   22 January 2018

@Kumar Doab: This is exactly the kind of information that I was looking out for sir!  The Bank owns the process when it comes to Debt Recovery Tribunals.  They seem to get adjournments with ease, flout norms with impunity, etc., without any check and balances.  For the simplest of things one needs to travel long distance to appeal in DRAT where they ask time for counter, essentially to prolong the misery for the Borrower, only to have the Chairperson rule in favor of the Borrower, and then Bank partly complies with the Order and one has to go back and continue all over again.  Not so if one can look outside the box, and fight in an arena which is neutral and level, where Truth can be discerned.  Just getting basic documents from the Bank has been such an uphill task, with the PO ruling that it is not necessary for adjudicating the SA!  How ridiculous!  Then the DRAT ordered the Bank to provide the documents, which the Bank only partially complied with, which is why I posted the query here. 

Also, I do know that once Sarfaesi action has started, the DRT is the only place for adjudication.  However, can I not approach the Consumer Forum for deficiency of services?  For instance, for a simple mortgage loan, for which I had applied, and filled out a Formal Bank Loan application form, if the Bank exerts undue influence, since I was leaving the country, and assures me that this is THE right instrument, and then entraps me into a no win debt trap, then this is both exerting undue influence, and deficiency of service, and can be heard by the Consumer Court.  However I am not sure if Sarfaesi Act would stand in the way.  The DRT route is so uncertain. Even when the DRAT orders for SA to be completed in 12 weeks, DRT flouts it, the Bank ignores it, and many a 12 week had come and gone - so many times!  Justice delayed is justice denied!


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