Section 55: Provisions on Disbursement of Credit

1) A bank or financial institution shall have to disburse credit only after disclosing the purpose subject to the directives issued by the Rastra Bank from time to time and the credit policy as determined by the Board of Directors.

2) While disbursing credit, a bank or financial institution shall have to obtain any movable or immovable property acceptable to it as collateral security or an appropriate guarantee so as to safeguard the interests of its own and of the depositors.

3) A bank or financial institution shall have to write to the concerned office to withhold any property which it has taken up as collateral security against a credit pursuant to this Section in the name of the bank or financial institution so that such property may not be registered in the name of, or transferred to, any person in any manner whatsoever.

4) When requested in writing to withhold, registration or transmission of property pursuant to sub-section (3), the concerned office shall have to withhold the registration or transmission thereof accordingly.

5) In case the Rastra Bank gives direction to disburse credits for such class and in such area as prioritized for the economic upliftment of the persons belonging to a low-income group and indigent class and of the inhabitants residing in any specific geographical region, to banks or financial institutions shall have to disburse credits according to the direction.

6) The terms and conditions, repayment schedule, and interests of the credits borrowed by the borrower shall be according to the deeds or agreement executed between the bank or financial institution and the borrower.

7) The bank or financial institution shall have to collect the necessary details of identity documents of the borrower, guarantor or, if the borrower is a firm, company or an institution, the directors, the shareholders having subscribed the shares in numbers more than the percent prescribed by the Rasta Bank or partners or owners in any manner thereof; the members of families of all of the above persons and if any of them is a beneficiary of any institution, and evidence of identity that may be required while taking legal actions.

8) While disbursing any credit by a bank or financial institution to anyone, the regular instalment of the credit, interests, penal interests, and repayment schedule shall have to be clearly specified in the deed or contract, and information thereof must be given to the borrower and guarantor.

9) A borrower may request details of the payable or paid principal, interests, penal interests, and other fees and the deed or contract executed in the course of availing the credit and the bank or financial institution shall have to make such details available.