2. Loan appraisal and terms / conditions
a) With the operationalisation of the Risk Assessment Model, which is an exercise in detailed risk analysis of the various facets of the projects, SIDBI ensures that there is proper and scientific assessment of credit application submitted by borrowers. The Bank would carry out detailed due diligence and appraisal exercise on credit worthiness of the borrower/ project and would not use margin and security stipulation as a substitute.
b) SIDBI would convey to the borrower the loan/ credit limit along with the terms and conditions thereof and would keep the borrower's acceptance of these terms and conditions given with his full knowledge on record.
c) Terms and conditions and other caveats governing credit facilities given by SIDBI arrived at after negotiation between SIDBI and borrower would be reduced to writing and duly certified by SIDBI's authorised official. A copy of loan agreement along with a copy each of all enclosures quoted in the loan agreement would be furnished to the borrower.
d) As far as possible, SIDBI would endeavour that the loan agreement clearly stipulates credit facilities that are solely at the discretion of SIDBI. These may include approval or disallowance of facilities, such as, drawings beyond the sanctioned limits, honouring cheques issued for the purpose other than specifically agreed to in the credit sanction, and disallowing drawing on a borrowal account on its classification as a non-performing asset or on account of non-compliance with the terms of sanction. It would also be specifically stated that SIDBI does not have any obligation to meet further requirements of the borrowers on account of growth in business etc., without proper review of credit limits.
e) In the case of lending under consortium arrangement, SIDBI, as a participating lender, would evolve procedures to complete appraisal of proposals in the time bound manner to the extent feasible, and communicate its decision on financing or otherwise within a reasonable time.