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FIVE months ago, I applied for a business loan from a public sector bank. The manager, after scrutinising the papers, promised that I would get the loan without any problem. Now, after I have completed all the preparatory work for starting my business, he has rejected my application without giving any reason for it. I am most upset. Getting a loan from another bank now would delay my plans. What do I do? This is a clear violation of the RBI guidelines on the Fair Practices Code for Lenders, which mandate that if for any reason, the loan is not sanctioned, then the applicant has to be informed in writing, giving reasons for denial. The bank is not doing it. The manager’s behaviour in this case raises suspicion about the motive behind the denial of the loan. You have two options. One is to write to the Nodal Officer of the bank, asking him to intervene. If his response is positive, you can pursue the application with the same bank and get the loan. Another option is to immediately collect all the papers, apply elsewhere and later, seek compensation from the first bank for the harassment caused. I would like to quote the decision of the National Consumer Disputes Redressal Commission in a somewhat similar case. Here, twice the consumer was informed by the agent (of LIC Housing Finance) that the loan had been sanctioned, yet, despite his submitting all the papers, the loan was not disbursed. Exasperated, the consumer took back the original documents and got a loan from a bank, but decided that the LIC Housing Finance must pay for deficient service, due to which, construction of his house was delayed by nine months. The consumer court directed LIC Housing Finance to pay Rs 50,000 as compensation and Rs 15,000 as costs.(LIC Housing Finance vs Shri Rajiv Rastogi and others, decided on July 10, 2012). I am applying for a personal loan to buy some essential household goods. This is the first time that I am doing so. What are my rights? When you apply for a loan, you have a right to information, right to quality service, right to redress of your grievance, if any, and above all, right to a fair deal. To ensure that the bank respects these rights, read up on the RBI Guidelines on Fare Practices Code for Lenders. It is on the RBI website (www.rbi.org.in). This is absolutely essential because it tells you the procedure that the banks ought to follow in respect of processing of an application and disbursal of loan. As per the Code, which all banks have to follow, first and foremost, the bank is supposed to give you all the information pertaining to loan processing, including the various fees charged, the terms and conditions , the rate of interest and other relevant information. It should also acknowledge in writing, the receipt of application from you, giving a time limit within which the application would be processed. You must get a copy of all the forms and papers submitted by you. If it is rejecting your application, it should say so in writing and give adequate reasons. for it.
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