Fair Practice Code in respect of Lending Activity, 2007

The Fair Practice Code as approved by the Board of Directors of the Corporation in its meeting held on 30/03/2007 is as under:


The Fair Practice Code sets out the minimum standards, for investment activity pursued by RIICO, to be followed while dealing with entrepreneurs seeking financial assistance. The Code explains how RIICO is expected to deal with the entrepreneurs who are availing the financial assistance from it.


1.1 The Code has been developed with a view to:

(a)              promote fair practice by setting minimum standard in dealing with entrepreneurs;

(b)             increase transparency so that entrepreneurs can have a better understanding of what they can reasonably expect of the services;

(c)              encourage market forces, through competition, to achieve higher operating services;

(d)             promote client friendly relationship between RIICO and entrepreneurs;

(e)              to develop confidence in the lending system of RIICO;




2.1 Our key commitments to entrepreneurs are

2.1.1 To act fairly and reasonably in dealing with entrepreneurs:

a.       Meeting the commitments and standards in this code, for the lending and financial services RIICO offers.

b.      Ensuring that our dealings with entrepreneurs rest on ethical principles of integrity and transparency.


2.1.2        To help entrepreneurs to understand how our financial products and services work by:

a.       Giving complete information about the various schemes of term lending of RIICO.

b.      Ensuring that our advertising and promotional literature is clear and not misleading.

c.       Ensuring that you are given clear information about our products and services, the terms and conditions and the interest rate/charges, which apply to them.

d.      Giving you information on what is best suited to you, how you can avail of the benefits, what are their financial implications and whom you can contact for addressing your queries.


2.1.3        To keep entrepreneurs aware & updated by:

a.                   Providing quarterly update of interest accrued on term loan account.

b.                  Keeping informed about changes, if any, in the interest rate, charges or terms and conditions.


2.1.4        To act promptly when things that go wrong by:

a.                   Correcting the mistakes.

b.                  Handling complaints promptly.

c.                   Telling you how to take complaint forward if you not satisfied.

2.1.5        To publicise the code, RIICO will make this code available on its website and on request provide either over the counter or by electronic communication or mail.


2.1.6        RIICO will not discriminate on the basis of age, race, gender, marital status, religion or disability while adopting and practicing the code.



a.       At the time of sourcing a loan product, we will provide information about the interest rates applicable, as also the fees/charges, if any, payable for processing, prepayment options and charges, if any, and any other matter which affects the interest of the borrower, so that a meaningful comparison with those of other institution/banks can be made and informed decision can be taken by entrepreneur.

b.      All particulars normally required for processing the loan application will be specified at the time of application. In case any additional information is required, the applicant will be contacted immediately.

c.       The loan application form of RIICO will cover various aspects of project formulation and details; information/documents required to be attached. Brief of various financial schemes covering eligibility criterion, purpose, rate of interest, repayment/moratorium period, various charges payable by the entrepreneurs etc. will also be available with the loan application form.

d.      On receipt of application for financial assistance, RIICO will provide an acknowledgement for receipt of loan application. Loan application duly supported with complete information/documents, will be disposed of by RIICO, normally within 45 days.

e.       RIICO will not discriminate on grounds of sex, caste and religion in the matter of lending. However, this does not preclude RIICO from framing, adopting, and approving, different schemes for various financial needs of the entrepreneurs.

f.        RIICO will process request for transfer of borrower's account, either from the borrower or from a bank/financial institution, in the normal course.



The competent authority shall issue Letter of Intent (LOI), on sanction of term loan assistance, which shall inter-alia provide information as regards to:

a.                   Amount of loan sanction

b.                  Terms and conditions

c.                   Rate of interest, period of compounding, liquidated damages etc.

d.                  Repayment schedule and moratorium period

e.                   The contact person for seeking disbursement of loan

RIICO will keep on its record the acceptance of the terms and conditions by the borrower by way of resolution of Board of Directors, in case of a company, or otherwise.



a.                   RIICO will give notice to the borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc.

b.                  Changes in the interest rates and charges, if any, shall be affected by RIICO prospectively and shall normally be effective from the date of sanction of loan. A suitable condition in this regard shall be inserted in the loan agreement.

c.                   Decision to recall/accelerate payment or performance under the agreement shall be in consonance with the loan agreement.

d.                  RIICO will release all securities on repayment of all dues or on realization of the outstanding amount of loan subject to any legitimate right or lien for any other claim RIICO may have against borrower. If such right of set off is to be exercised, the borrower shall be given notice about the same with full particulars about the remaining claims and the conditions under which RIICO is entitled to retain the securities till the relevant claim is settled/paid.


6.0              GENERAL

a)      RIICO will refrain from interference in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless new information, not earlier disclosed by the borrower, has come to the notice of RIICO).

b)      In case of receipt of request from the borrower for transfer of its account, the consent or otherwise i.e. objection of RIICO, if any, shall be conveyed within 21 days from the date of receipt of request. Such transfer shall be as per transparent & contractual terms and conditions of loan agreement.

c)      In the matter of recovery of loans, RIICO will not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans etc.

d)      In order to resolve the grievances of the entrepreneurs, the Board of Directors of RIICO has laid down the following grievance redressal mechanism.

Nature of grievance

Redressing Authority

Sanction of loan

General Manager (Appraisal)

Legal Documentation

General Manager (Appraisal)

Disbursement of loan

Financial Advisor

Recovery of term loan

General Manager (FR)

Accounting & Allied matters

Financial Advisor


e)      In case the borrower is not satisfied with the decision of the concerned redressing authority, as mentioned above, it shall have an option to appeal before the Managing Director/ Chairman & managing Director as the case may be, RIICO to ensure that all disputes are heard and disposed of.

f)        Annual compliance of the code and functioning of the grievances redressal mechanism shall be placed before the Board for review.