Background
RBI has issued guidelines on the Fair Practices Code for Non-Banking Finance Companies, which sets fair-practice standards when dealing with individual customers and serves as a part of best corporate practice. In view of this, the Company has adopted the code to provide transparency in business dealings with its borrowers.
Application of Code
This Fair Practices Code applies to all categories of products and services offered by the Company, whether provided across the counter, over the phone, through an interactive electronic device, on the internet, or by any other method.
Applications for Loans and their Processing
Loan application forms will include necessary information which affects the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by other NBFCs can be made and an informed decision can be taken by the borrower. The loan application form will indicate the documents required to be submitted with it.
The loan application form and the sanction letter / MID (Most Important Document) issued to the customer shall disclose the approach for gradation of risks and the rationale for charging different rates of interest to different categories of borrowers, and the same shall also be made available on the website of the Company. The information shall be updated whenever there is a change in the rates of interest.
The Company will devise a system of giving acknowledgement for receipt of all loan applications. Preferably, the time frame within which loan applications will be disposed of will also be indicated in the acknowledgement. If the Company cannot provide the loan to the borrower, the same shall be communicated to the borrower with the reason(s) for rejection.
The loan application form will clearly state the information that the Company requires to collect from the customer to fulfil the KYC norms and to comply with legal and regulatory requirements. The Company may request additional information in case it is required.
The Company will make available its loan products to all qualified borrowers and shall not discriminate on the grounds of sex, caste and religion in the matter of lending. However, this does not preclude the Company from participating in schemes framed for different sections of society.
When a person is considered to be a guarantor to a loan, the Company shall inform him/her the following under acknowledgement — a Letter / Deed of Guarantee stating the terms of liability as guarantor, and any default in servicing of the loan by the borrower to whom he/she stands as a guarantor.
Loan Appraisal and Terms / Conditions
The Company will convey in writing to the borrower, by means of a sanction letter or otherwise, the amount of loan sanctioned along with the terms and conditions including the annualised rate of interest and the method of application thereof, and keep the acceptance of these terms and conditions by the borrower on its record.
The loan sanction letter and all communications to the borrower shall be in the vernacular language or a language understood by the borrower.
Disbursement of Loans including Changes in Terms and Conditions
The Company will give notice to the borrower of any change in the terms and conditions, including disbursement schedule, interest rates, service charges, prepayment charges, etc. We will also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard will be incorporated in the loan agreement. The penal interest to be charged by the Company for late repayment of the loan shall be mentioned in bold letters in the loan agreement.
A decision to recall / accelerate payment or performance under the agreement, or to seek additional securities / collaterals, will be in consonance with the loan agreement.
The loan agreement shall contain a built-in re-possession clause and provisions regarding the notice period before taking possession, the circumstances under which the notice period can be waived, the procedure for taking possession of the security, a provision regarding the final chance to be given to the borrower for repayment of the loan before sale / auction of the property, the procedure for giving re-possession to the borrower, and the procedure for sale / auction of the property.
The Company will release all securities on repayment of all dues or on realisation of the outstanding amount of the loan, subject to any legitimate right or lien for any other claim the Company may have against the borrower. If such a right of set-off is to be exercised, the borrower will be given notice about the same with full particulars about the remaining claims and the conditions under which the Company is entitled to retain the securities till the relevant claim is settled / paid.
General
The Company will refrain from interference in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless new information, not earlier disclosed by the borrower, has come to the notice of the lender).
In case of receipt of a request from the borrower for transfer of the borrower account, the consent or otherwise (i.e., objection of the Company, if any) will be conveyed within 21 days from the date of receipt of the request. Such transfer shall be as per transparent contractual terms in consonance with law.
In the matter of recovery of loans, the Company will not resort to undue harassment — viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.
As a measure of customer protection, and in order to bring uniformity with regard to prepayment of various loans by borrowers of banks and NBFCs, the Company shall not charge foreclosure charges / prepayment penalties on any floating-rate term loans sanctioned to individual borrowers. The Company shall inform the borrower in the event of closure / shifting of its branch office.
Complaints
In case of any complaint / grievance, the applicant / borrower will have to inform the concerned branch in writing. The Branch Officials shall immediately take up the matter for redressal as per the policy. In case the complaint remains unresolved, the borrower shall write to the Zonal Office level.
All disputes in relation to the products and services shall be heard and disposed of within 30 days from the date of receipt of the complete details in respect of the grievance.
In case the response from the Branch Official or Zonal Office level is unsatisfactory, or no response is received, the complaint should be escalated to the Grievance Redressal / Nodal Officer:
[Grievance Redressal Officer: to be provided]
[grievance email: to be provided]
In case the borrower is not satisfied with the decision of the Grievance Redressal Officer of the Company, or his complaint / dispute is not resolved within 30 days, he may approach the Officer-in-Charge of the Regional Office of the Department of Non-Banking Supervision of the RBI.
A consolidated report of periodical review of compliance with the Fair Practice Code and the functioning of the grievance redressal mechanism at various levels of management may be submitted to the Board / Committee of Directors at regular intervals, as may be prescribed by it.
The Company shall furnish a copy of the loan agreement to the borrower at the time of disbursement of the loan.