DATE:  30/11/2007

 

TO ALL OFFICES

In supersession of all previous circulars of UPGB/DPKGB/KGB/RLKGB regarding  the subject.

LOAN & ADVANCE Cir. N0.  ***/***                                                

REG: -  SERVICE  CHARGES

The revised ‘Service Charges’ ,which are inclusive of ‘Service Tax and Education Cess’, wherever applicable, come into force with immediate effect. All service charges are to be rounded off to the next higher rupee. While levying service charges, it should be ensured that there is no leakage of revenue in levying of service charges.

 

SERVICES                                                                      RATES

 

PROCESSING   CHARGES

(a)   Working  Capital

Upto  Rs. 25000/-                                                          Nil

Above Rs. 25000/- & Upto Rs. 2 lakh                       Rs. 300/-*

Above Rs. 2 lakh                                                        Rs. 200/- per lakh or part thereof.

Non- Fund Based Limits                                            50% of the charges as applicable

                                                                                    to fund based limits.

·                   In case of SSI  advances upto Rs. 2 lakh, no processing charges are to be recovered .

No processing charges are to be levied  in case of advances against deposits, Govt. securities, UTI,Mutual Fund Units, NSCs, KVPs, IVPs and IRDP cases.

 

Further, no processing fee/service charges /ledger folio charges are to be levied in respect of borrowers who have been issued kisan credit card against the security of FDR, NSCs, KVPs or other such liquid securities.

b)  Recovery of Processing charges

     (i)   Fresh   Proposals

The processing charges in case of fresh proposals may be recovered in two                              stages as follows:

-          50% of the processing charges on receipt of proposal.

-          Balance after sanction of credit facilities on the amount of limit sanctioned.

In case the loan proposal is declined or the limit sanctioned is not availed by the customer within a period of six months the processing fee recovered shall be forfeited after giving due notice to the borrower .

Chairman may relax the condition of recovery  of 50%processing fee in advance.  In such cases, 100%processing fee shall be recovered at the time of sanction/ disbursement of limits, in case the loan proposal is rejected, processing fee may not be charged.

(ii) Sanction of Adhoc/ Enhanced working capital limits            

In case of adhoc  working capital limits the processing charges are to be recovered  

                                                   …………2/-

 

(02)

 

proportionately   for   the  adhoc  limit   sanctioned   for   the   period  of such limits.     In case of  enhancement in the  credit limits, the charges are to be  levied on the entire amount of  enhanced limits sanctioned.

(iii)   Renewal Of Working Capital Limits   

In case the existing limit is allowed beyond its due date of renewal on account of non submission/ delay in submission of financial data/ renewal proposal by the borrower, the processing charges

be recovered on due date  without waiting for  formal renewal  of the limits. However, on subsequent renewal of the credit limit the processing charges  already  recovered for the unexpired period be appropriated towards the processing charges recoverable at the time of renewal as per illustration given below:

Illustration

For a working capital limit of Rs. 1.00 crore which is due for renewal on 1.1.2004 but got renewed by enhancing the limit to Rs. 1.20 crore on 1.4.2004, processing charges@Rs.200/- per lakh will be recovered as under:

As on 1.1.2004

Processing charges for  12 months @Rs.200/-

Per lakh i.e. Rs.200 x100                                                                           Rs. 20000

As on 1.4.2004

Processing charges on enhanced limit of Rs.

1.20crore @ Rs.200/- per lakh                                     Rs. 24000

Less

Allowance of the proportionate processing

Charges for the unexpired period of 9 months

(i.e.1.4.2004 to 31.12.2004) recovered on due

date of renewal i.e.

                    20000x9                                                     Rs. 15000

                        12                                                                                         Rs. 9000

Next renewal  date will be 01.04.2005

2.   UPFRONT  FEE

Upfront fee is to be charged in lieu of processing charges  in case of all term loans including DPG as under except term loans under retail segment for which separate rates have been prescribed:-

 

UPFRONT  FEE FOR TERM LOANS (INCLUDING DPG)
Upto Rs. 25000	Nil
Above Rs. 25000 and upto Rs.2 lakh	Rs. 300/-*
Above Rs.2 lakh	1.25% of the loan amount **
For schemes where refinance is obtained	As specified by refinancing agency

 

*In case of SSI advances upto Rs. 2 lakh, no upfront fee is to be recovered.

**Upfront fee for term loans above Rs. 2 lakh and upto 10 lakh to SSI/ Tiny industries/ agricultural activities is to be charged  @ 0.60% of the loan amount.

Upfront fee is to be recovered as a one time fee. Where financing  is in participation with financial institutions, upfront fee be levied/ shared  in line with those charged  by financial institutions. However,this fee is not to be charged for the schemes where refinance is obtained(e.g. NABARD assisted/ refinance  projects).

 

…………3/-

 

(03)

 

The processing/ evaluation fee in NABARD assisted/ refinanced projects is to be levied as under:

    “For advances  where capital outlay  of the project does not exceed Rs.2 lakh, no charges be levied .

     Where capital outlay of the project exceeds Rs.2 lakh branches may charge evaluation fee once-and-for-all(in lieu of processing fee)@0.60% of the capital outlay of the project. The evaluation fee covers the cost relating to pre-sanction, inspection/ visit fee,legal fee for examination of title deeds, encumbrance certificate fee etc. However,expenses relating to followup of utilization in the form of post-sanction, supervision etc.,branches may charge out of pocket expenses in addition to evaluation fee.

     As regards waiment of evaluation fee the cases can only be considered at HO on merits.”

Term Loans(Under Retail Segment Schemes)

Housing Loan                                               :                1% of the loan amount

Other schemes (Traders, Conveyance          :                0.60% of the loan amount

Education, consumer,Mortgage of IP,

Future Lease Rentals,etc.

Upfront fee is to be levied in the same way as processing charges are recovered(i.e

50%on receipt of the proposal and balance after sanction of credit facility).In case the loan proposal is declined or the term loan sanctioned is not availed by the customer within a period of 6 months,upfront fee recovered shall be forfeited after giving due notice to the borrower .

3.         HANDLING CHARGES

 

Wherever full waiver of processing fee or upfront fee is permitted, ‘Handling charges’@Rs. 12/-per lakh or part thereof, subject to a maximum of Rs. 60000/-,are to be recovered from borrowers availing limits of Rs. 1 crore & above, separately in lieu of processing fee & upfront fee.

4.         PRE-PAYMENT  CHARGES

 

In order to dissuade the borrowers from shifting to other banks, pre-payment charges@2% on the outstandings pre-paid, are to be levied in case of all term loan sanctioned on or after 01.04.2004. Such charges are applicable only in respect  of the  borrowers who shift to other banks by prepaying the loans. In case the loans are pre-paid  by the borrowers from their own sources, pre-payment charges may not be levied.

5.    DOCUMENTATION  CHARGES

 (a)For Loan Amount:

    Upto Rs.2 lakh                           :          Nil

    Above Rs.2 lakh                         :         Rs. 200/- per lakh or part thereof, subject

                                                                  to a maximum of Rs. 25,000/-

  The above mentioned documentation charges are to be levied only once in a case of term loans. However, in case of cash credit accounts, documentation charges are to be levied first at the time of fresh sanction and then at the time of enhancement.(For the enhanced portion of limit only). No documentation charges are to be levied at the time of renewal of limits.

The aforesaid charges will not be applicable in case of advances against deposits,Govt.securities, UTI mutual fund units, RBI relief Bonds, NSCs, KVPs, IVPs, IRDP cases and staff loans.

 

…………4/-

 

(04)

 

(b)  Under Retail Segment Schemes(Flat Charges):

Housing loans                               :          Rs. 1500/-

Other Schemes                              :          Rs. 300/-

6.    Issue  of balance/ Interest certificate

  

 Rs.35/- per certificate

7.     ISSUE OF NO-DUES CERTIFICATE

 

  (Except For  Borrowers / Intending borrowers Covered Under Priority Sector)

  Rs. 35/- per certificate

8.     SPECIAL  TRANSACTIONS-

Transfer of funds from  advance / borrowal  accounts

The facility of transfer of funds from the account of borrower including organization/ firms at one center to their account at another centre at concessional rates/ at par can be  classified into two broad categories:

 

 1)       Accounts From Where debit balances are transferred.

11)       Accounts from where credit balances are transferred.

                 The norms prescribed for the purpose  are as under :-

 

(a) The facility  may be extended to corporate companies/organizations/firms for  tansfer of funds from their account at one centre to their account at another centre on a very selective basis. Each case is to be considered on merit viz:-

i)        Total business connections with bank.

ii)  Frequency of transfer of funds affected i.e. daily, weekly,fortnightly,monthly etc., to ensure that it does not drain on bank’s profits as also it does not prove to be a losing proposition.

iii)  The extent of concession to be permitted e.g. 10%, 25%, 50% or at par should be need based.

iv)   Cost  to the bank is minimal.

b)      Out of pocket expenses must be recovered in full in all cases.

c)    In cases where debit balances are transferred, interest should be charged for transit        period as well.

 

The aforesaid concession can only be approvered by the chairman.

9.  OUT OF POCKET EXPENSES

   (POSTAL,TELECOMMUNICATION AND OTHERS)

   Actual charges(round off to next higher rupee) to be recovered as under:

 1.        Postage                           Ordinary Post                  -   Free

                                                    Registered Post/Courier  -  Actual expenses

 11.     Telegram charges

 111.   Telex charges

 1V.    Telephone charges

 V.      Godown charges

            -    Godown keeper’s  salary

-          Godown Delivery charges

 V1.     Insurance

 V11.   Valuation charges of appraisers

 

…………5/-

 

(05)

 

 V111.  Legal charges:

-          Stamp duties

-          Fees paid for  documentation

-          Solicitors’ fee

1X.      Consultancy charges paid to consultants for Feasibility Reports or  Consultancy Reports.

X.         Travelling, Conveyance Expenses of Bank’s Inspectors or Field Officers.

X1.       Supervision charges.                                                             

 

10.       PURCHASE/DISCOUNT OF BILLS/CHEQUES

 

(a)        DD Purchase (Cheques/Drafts)

            Local Cheques/Drafts                         Interest rate as applicable to clean advances

                                                                        for number of days funds are advanced

                                                                        depending upon the time taken at different

                                                                        clearing centers. No collection charges are to

                                                                        be levied.

            Outstation Cheques/Drafts                 55 paise per cent plus collection charges for

                                                                        cheques as applicable for respective slabs.

NOTE :

i)          DD purchase charges should not be levied for outstation cheques upto permissible limit of immediate credit is afforded.

ii)         In case the cheque/bill (purchased/discounted) is returned unpaid, interest at 2% over and above our maximum interest rate applicable for working capital advances be charged for the period from the date of purchase/discount till the date of actual reimbursement, in addition to handling charges as prescribed for return of cheque/bill. In such cases, the hundian/interest recovered at the time of purchase/discount of cheque/bill will be appropriated towards the amount recoverable on account of return of the cheque/bill. However, the amount of commission charged initially will not be refunded.

iii)        In case the full value of the cheque/ bill is not advanced against, interest element by way of purchase/ discount may be levied only on the actual amount of drawings allowed to customers.

iv)        Postages, telegram charges and other out of pocket expenses have to be recovered in full. However, ordinary post will be free.

v)         If the cheque/bill purchased is sent for collection to another bank, the interest component will be retained by the negotiating Bank whereas the collection charges will be shared between the negotiating bank and collecting bank on 50:50 basis, interse public sector banks.

vi)        With a view to improve customer service, borrowers may be informed about service charges and interest component/ hundian separately on purchase/ discount of cheques and bills.

 

 

All the branches are advised to note the above  guidelines for strict compliance.