To All Branches/Offices/Credit Hubs

Own your Gold

Entice our customers to purchase Federal Pure Gold during this Akshaya Tritiya festival by remitting just 20% of the value of gold under Own Your Gold Scheme. Let them utilise this opportunity to get insulated from future price hikes. Given the asset backing of this gold loan product and the corollary benefits we envisage through increased Pure Gold Sales (increases other income of the Bank, helps us to deploy our funds securely & profitably and widens our client base), we exhort all our field level functionaries to make use of this occasion to give special attention for giving wide publicity on Own Your Gold scheme, among the existing customers and general public.

Major Attractions
All Branches are permitted to sanction Own Your Gold Scheme as per the irrespective of whether they are authorised to sell Federal Pure Gold or not. For promotion of OYG & in view of the Akshaya Tritiya festival, margin on OYG reduced to 20% w.e.f 21.04.2011. ROI is only 12% (floating) Limits up to Rs.75 lakhs available. (Even higher limits can be considered on a case to case basis after obtaining permission from RBD)

Easy repayment terms with affordable monthly instalments extending up to 60 months. Release of gold permitted against part payments. No Pre-payment penalty is charged Hassle Free Loan processing and speedy sanction Income and repayment capacity of the borrower can be assessed by the Branch Manager. No processing Fee , Easy documentation- no stamp paper agreement: only an undertaking in plain paper Staff Members are also eligible for OYG loans (for details, please refer Bulletin No: 20/08, Part-II) Federal Pure Gold coins/ Ingots can be pledged with Federal Bank for all types of Gold Loan

Our Target Segments Those who wish to purchase gold For a future special occasion such as marriage of children/gift to loved ones. Parents start purchasing gold at the earliest opportunity to reduce the shock of future price increases. But usually almost all of them purchase gold in the form of jewellery and face significant loss of value when they sell or go for latest fashion, as they are incurring huge expenses towards design and making charges. Our scheme, OYG enables them to purchase Pure gold by putting in only 20% of the current market price, and facilitating payment of the balance in affordable monthly instalments. The gold coins/ ingots purchased so, can be converted into jewellery at the appropriate time, without incurring any loss towards processing or making charges. The facility for partial withdrawal is another unique attraction for our prospective customers. As an investment avenue - Gold is accepted as an alternative stable investment avenue even among the middle class people.

The intrinsic value of the yellow metal needs no further demonstration and this affinity towards investment in gold is going to be yet another unique selling point for us. Sales of Federal Pure Gold Kindly note that all branches in Kerala are authorised to sell Federal Pure Gold. Branches outside Kerala who are not authorised to sell Federal Pure Gold can arrange the same for their customers from nearest authorised branches. In case, any branch want permission to sell Federal Pure Gold on their own, contact Retail Business Department for necessary guidance. Contact person - Shri. Ranjith K, Asst.Manager (Direct Phone No: 2385530, Mobile : 9847736778). All accounting of Federal Pure Gold sales are system based and hence there are no operational hurdles. Payment of VAT etc are also centralised. Various promotional initiatives are also in place Special rates, Daily cash prizes to branches who sell Federal Pure Gold from April 11, 2011 to May 31, 2011 (For details, please refer RBD Circular 1862 dated 9.04.2011) For ready reference, the salient features of the OYG Scheme, relevant documentation forms and System related instructions are given in annexure. We are sure that this product is an attractive tool at the hands of the frontline team to acquire more business. ! " #! $

K.S Mohan Addl General Manager

Own your Gold

Eligibility Type of Loan Classification Loan Amount (per individual) Margin Period Interest rate Processing Fee Penal Interest Pre-payment penalty Repayment Security Delegation Documents Individuals having adequate income to repay the instalments. Term Loan Non-priority Minimum - Rs. 50000.00 Maximum - Rs.75 Lacs 20% of gold market price. VAT to be remitted additionally. Maximum 60 months At Present 12%, Floating Nil 2% for the defaulted amount Nil EMI Pledge of Federal Pure Gold coins/ingots retailed by our Bank As per Federal Gold Loan Scheme Loan application Demand Promissory Note C 95/77 Security Delivery Letter C 129 Consent letter for private sale Receipt of acknowledgement Letter of undertaking For Partial release Release letter Partial Release of gold permitted once in a calendar year against part payments provided repayment is regular & adequate security is available after release to cover the balance outstanding in the account with accrued interest, duly maintaining specified margin. However, branch may accede to genuine requests of the borrower for partial release even otherwise based on merits. In all such cases, repayment shall be regular & adequate security shall be available after release to cover the balance outstanding in the account with accrued interest, duly maintaining specified margin.

Partial Release of Gold

Branches shall monitor all loans granted under this scheme and ensure that the EMI is promptly remitted in the account. If EMI is not remitted for one month, reminder shall be given immediately (within 15 days of the due date) to all the parties concerned. If EMI is not remitted for two months registered notice for private sale / auction shall be given immediately giving 15 days time for regularization of the account. If the account is not regularized within the stipulated period, sale/auction shall be done within the next 15 days after obtaining necessary permission from the Regional Office.
If gold market price(excluding VAT) is going down by 15% or more of the market price

(Excluding VAT) of the loan sanctioned date , the customer shall be given notice to remit part payments over and above the EMI so that the balance outstanding in the account is within the permissible DP. If the account is not regularized within 10 days, immediate steps shall be taken to settle the account by private sale of Federal Pure Gold coins / ingots after serving registered notice for private sale/auction. For other terms and conditions of the Scheme, Please refer Circular No : 383/ RBD - II /S8/3728/08 dated (reproduced in Bulletin 16/2008, part-II). Staff Members are also eligible for OYG loans (for details, please refer Bulletin No: 20/08, PartII).

Collateral code

: Collateral code has to be given as 2 GM (2 grams Gold Coin) 5GM (5 Grams Gold coin) 8GM (8 Grams Gold coin) 20GM (20 Grams Gold coin) 50GM (50 Grams Gold coin) 100 GM (100 Grams Gold coin) If a partial release has to be done, branch has to release the complete collateral code and then pledge the remaining numbers w.e.f the loan date For eg ; A party has pledged 3 number of 5 GM gold coin & 9 numbers of 8 GM gold coin and on a later date, if the customer wishes to release 2 numbers of 8 GM gold coin, then the branch has to release all the 9 Nos of 8 GM gold coin and then repledge the remaining 7 Nos showing the effective date as the date of opening of the loan i,e not the date n which the gold coins/ingots are released)

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THIS LETTER OF UNDERTAKING executed on this the day of .20.. by .. . . ..(hereinafter referred to as the borrower/s which expression shall include his/her/their respective heirs, executors , administrators or legal representatives and assigns ) in favour of the Federal Bank Limited, a body corporate constituted under the Companies Act 1956 ,having its Registered Office at Alwaye and Branch Office among other places at .(hereafter referred to as the Bank which expression shall include its successors and assigns). Whereas the Bank has a Term loan scheme under Instalment Payment Arrangement referred to as Own your gold scheme for granting financial assistance to borrower/s , for acquisition/purchase of Gold coins or other Gold items marketed by the Bank (herein after referred to as "the scheme" which shall include the scheme as modified from time to time). WHEREAS the Borrower has applied for a Term Loan facility of Rs...to the Bank against the security of pledge of Gold coins or other Gold items marketed by the Bank (hereinafter referred to as Federal Pure Gold), for the purpose of acquisition/purchase of Gold coins or other Gold items marketed by the Bank under the said scheme. And whereas the Bank has on execution of this undertaking and in accordance with the terms and conditions mentioned herein and further to be secured by Demand Promissory Note executed in favour of the Bank /order by the borrower/s, agreed to grant / granted to the borrower the credit facility by way of Term Loan of Rs(Rupees only) hereinafter referred to as " the loan . NOW IN CONSIDERATION of the Bank having granted /agreed to grant the Loan of Rs.the borrower do hereby undertake, assures, confirm and declare as follows: 1. The borrower/s has /have read and understood the rules and regulations of the scheme and the borrower/s undertake/s that he /she /they shall be bound by the rules and regulations of the scheme under which the loan is granted/ agreed to be granted and the amendments that may be made thereto from time to time. 2. As security for the loan, the borrower/s has/have pledged and delivered to the Bank Federal Pure Gold more particularly described in the schedule hereunder. 3. The borrower (s) agree (s) to pay interest on the loan amount at .% above the base rate of the bank as fixed by the bank from time to time or at such other rate that the bank may from time to time stipulate with monthly rest. The present base rate of the bank is .% per annum and accordingly the borrower(s) shall pay interest at the rate of% per annum with monthly rest. The interest shall start accruing from the date of disbursement of the loan or any part thereof and shall be calculated on the daily balance outstanding in the account. grams of

4. The rate of interest specified above shall be subject to revision by the bank at any time and from time to time either on account of a revision in the Base Rate of the bank or otherwise as decided by the bank from time to time/as per directives of the Reserve Bank of India. The variation in the rate of interest will be notified on the Notice Board of the bank and no separate intimation/notice will be sent to the borrower(s) and the borrower(s) waives such intimation/ notice. 5. It is agreed and understood that applicable rate of interest shall be the Base Rate plus the percentage rate or margin specified over and above the Base Rate (Spread). The borrower confirms that the Bank has explained and the borrower has understood the various components of Banks Base Rate. The borrower further acknowledges and confirms that the borrower has accepted the Spread applied over the Banks Base rate to arrive at the applicable rate of interest. The borrower acknowledges and confirms that Bank has explained to the borrower in detail and the borrower has understood that Banks Base Rate is a reference rate used by the Bank to decide the minimum rate of interest chargeable for any loans / credit facilities given by Bank and that the spread is the margin added to the Banks Base Rate interalia depending upon the borrower' credit s rating. The borrower further agrees that Bank is at liberty to vary the Base Rate and / or the spread at such rate/s as may be decided by the Bank from time to time and the borrower agrees to pay the interest at such revised rate. 6. If the Borrower commits default in repayment of any instalment of the loan or any amount payable under the terms of this agreement or commits breach of any of the terms and conditions of this agreement and/ or the sanction order, additional interest @ 2% per annum or at such other rate fixed by the bank from time to time over and above the rate of interest specified hereinabove shall be payable on the instalments or amount so defaulted, for such period as the irregularity, breach, default continues or for such periods as the Bank may deem it necessary and such additional interest shall be payable as and when it falls due. The decision of the Bank on whether there has been any such default or breach shall be final and binding on the Borrower. The payment of such additional interest shall be without prejudice to the other rights or remedies available for the Bank. The borrower undertakes to pay interest due for each month /quarter/year or as and when the interest is applied by the Bank and the same becomes due. 7. The Borrower/s undertake/s to repay the loan amount together with interest ,additional interest, charges, and other expenses in.. months in equated monthly/quarterly instalments of Rs each until the entire loan amount together with interest and other charges is repaid in full , within the aforesaid period. The first of such Instalment shall be paid to the Bank on . and the subsequent instalments on or before the same day of succeeding months/quarters .Bank is entitled to re-determine the equated monthly/quarterly

instalments as fixed above consequent to revision in the rate of interest or otherwise and the borrower/s undertake/s to repay the loan amount as per the revised equated instalments. 8. In the event of reduction in the market value of the Federal Pure Gold pledged, the borrower undertakes to remit additional amount so as to bring the balance outstanding in the account within the permissible DP which is arrived at on a daily basis. In case the account is not regularized immediately after occurrence such an event, Bank has the right to settle the entire liabilities in the account by private sale of the gold coins / ingots.

9. The Bank shall have the right to recall the loan at any time at its sole discretion on violation of any of the terms and conditions of this undertaking and /or any other terms and conditions stipulated from time to time. The decision of the Bank as to the violation of any of the terms and condition shall be final and the borrower shall not question the said decision under any circumstances whatsoever. 10. That the Bank may at its own absolute discretion discontinue the loan granted with or without assigning any reason whatsoever and the Bank shall not be liable for any loss or damage that may cause to the Borrower due to such withdrawal. 11. The Borrower/s do hereby declare/s that the Federal Pure Gold pledged as security exclusively belong to the borrower/s and no other person has any interest, right or claim over the same. 12. THAT in the event of any loss / damages / expenses incurred to the Bank on account of or in connection with the Federal Pure Gold pledged, the borrower/s shall be responsible for the same and shall make good such loss /damages and expenses forthwith. 13. The Bank may at its absolute discretion allow partial release of one or more gold items pledged by the

Borrower/s once in a calendar year against part payments, if the Bank is fully satisfied that repayment in the loan account is regular and adequate security is available after such partial release to cover the balance outstanding in the account with accrued interest after maintaining the required margin. 14. The Bank is at liberty to sell or otherwise enforce the Federal Pure Gold pledged at any time for realization of the dues arising out of the loan or any other liabilities of the borrower to the Bank . Bank shall have the fullest liberty and right to sell, dispose of the gold ornaments for realizing its dues by public auction and /or private negotiation or otherwise. 15. The Bank shall have the absolute freedom and right to retain and /or sell the Federal Pure Gold pledged for other liabilities of the borrower and nothing specified in this undertaking shall affect the right of the Bank to proceed independently and separately against the Borrower/s for realizing its dues if the Bank so desires. 16. The Borrowers hereby confirm that granting of the loan shall be purely at the discretion of the Bank and that notwithstanding anything contained herein before the Bank shall at its absolute discretion, approve or disallow facilities such as partial release of the gold items drawing beyond the sanctioned limits, disallow drawings in the loan account on its classification as non performing asset or upon non-compliance with the terms of sanction. The Bank shall not be required or shall not be under any obligation to extend or allow further facilities to meet the additional requirements of the borrower on account of growth in business etc, other wise than at the discretion of the Bank and without proper review of the credit limits. 17. The Borrower understand/s that as a pre-condition, relating to grant of the loans/ advances/ other nonfund-based credit facilities to him/ them, the Bank requires his/ their consent for the disclosure by the bank of, information and data relating to him/ them, of the credit facility availed of/ to be availed, by him/ them, obligations assumed / to be assumed, by him/ them, in relation thereto and default, if any, committed by him/ them, in discharge thereof. Accordingly, the Borrower hereby agree/s and give consent for the disclosure by the Bank of all or any such;

a. information and data relating to him/ them; b. the information or data relating to any credit facility availed of/ to be availed, by him/ them, and c. default, if any, committed by him/ them, in discharge of his/ their such obligation, as the Bank may deem appropriate and necessary, to disclose and furnish to Credit Information Bureau (India) Ltd. and any other agency authorized in this behalf by RBI. 18. The Borrower declare/s that the information and data furnished by him/ them to the Bank are true and correct. 19. The Borrower undertake/s that: a. The Credit Information Bureau (India) Ltd. and any other agency so authorized may use, process the said information and data disclosed by the bank in the manner as deemed fit by them; and b. The Credit Information Bureau (India) Ltd. and any other agency so authorized may furnish for consideration, the processed information and data or products thereof prepared by them, to banks/ financial institutions and other credit grantors or registered users, as may be specified by the Reserve Bank in this behalf ) L*2! / 4 * /$ ! # "! ' 8" / $ + /$ @ " 1 @ $" 4 " 8 / " $ :0 7 4: " $ ! 4 :5 1" &$ -6 A% ( 3

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