Fair Practices Code
This has reference to RBI Circular No. DNBS.CC.PD.No.320/03.10.01/2012-13 dated February 18, 2013, wherein the Reserve Bank of India (RBI) has issued Draft Guidelines on Fair Practices Code for NBFC’s. RBI has asked NBFC’s to implement Fair Practices Code based on these guidelines. This code sets minimum Fair Practices standards for the company to follow when it is dealing with the customer. It provides information to customers and explains how the company is expected to deal with the customers on day to day basis.
(I) Objective of the Code
The Code has been developed with an object to:
Promote fair practices by setting minimum standards in dealing with customer
Increase transparency so that customer can have a better understanding of what type of service level can be expected from the Company
Foster customer confidence in the Company
(II) Application of the Code
The Code applies to all products offered by the Company.
(III) The Code is Committed to
(a) To help borrower / customer to understand how Company’s financial products and services work by:
(i) Ensuring that the customer is given clear information about Company’s product and services, the terms and conditions and interest rates/service charges which apply to them.
(ii) Keeping customer informed about changes in the interest rates, charges, terms and conditions
(b) To act fairly and reasonably in all dealings with the customer;
(c) To treat personal information of customers as private and confidential
(IV) Application for loans and their processing
(a) All communication to the borrower shall be in vernacular language or in a language as understood by the borrower.
(b) Loan application forms would include necessary information which affects the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by other NBFC’s can be made and inform decisions can be taken by the borrower. The loan application form may indicate the documents required to be submitted to the application form.
(c) The Company would derive the system of acknowledgment for receipt of all applications. Preferably the time frame, within which loan applications will be disposed of should also be indicated in the acknowledgment.
(V) Loan Appraisal and Terms and Conditions
(a) The Company shall convey in writing to the borrower by means of approval letter/ sanction letter or otherwise, the amount of Loan approved/sanctioned along with terms and conditions including annualized rate of interest and method of application thereof. It would keep the acceptance of these terms and conditions by the borrower on the Company’s Files.
(b) The Company shall furnish a copy of the loan agreement along with copy of each enclosures, as applicable to the borrowers at the time of disbursement of loans.
(c) Loan agreement shall also mention in bold about the penal interest charged for late repayment.
(VI) Information regarding Financial Products & Processing of Loan applications
(a) The customer shall be given information regarding interest rates, terms and conditions for loan and other charges. Besides this, all other necessary information which affects the interests of the borrower shall be furnished so that the borrower is in a position to make a meaningful comparison with the terms and conditions offered by other NBFCs and informed decision can be taken by the borrower.
(b) Acknowledgment shall be given on receipt of loan application documents. Normal time frame for processing of the Loan Application would also be informed to the customers
(c) After the loan is sanctioned, customer shall be informed about the interest rate at which loan is sanctioned, and method of application thereof, mode & time at which the interest will be debited (whether monthly or quarterly) and other terms and conditions applicable to loan.
(VII) Disbursement of Loan including changes in Terms and Conditions
(a) The Company would ensure timely disbursement of loans in conformity with the terms and conditions of loan sanctioned. It would give notice of any change in the terms and conditions including disbursement schedule, interest rates, service charges, repayment charges etc. It would ensure that changes in interest rates are changed only prospectively.
(b) Decision to recall/accelerate payment or performance under the agreement shall be in consonance with the loan agreement.
(c) The Company would release all securities on repayment of all dues or on realization of outstanding amount of loan subject to any legitimate right or lien for any other claim the company may have against the borrower with prior notice to borrower. The Notice will provide 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 fully.
(VIII) Non-Interference in the Affairs of the Borrower :
The Company should refrain from interference in the affairs of the borrower except for what is 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 company).
(a) The Company shall treat customer information as private and confidential and shall be guided by following principles and policies:
The information shall be parted by the Company only in the following circumstances:
Information required to be given under law or as demanded or required by Statutory authorities
Information is given with customer’s specific written permission
(b) In case of receipt of request from borrower for transfer of borrowal account, the consent or otherwise i.e. objection by the company if any, would be conveyed within 21 days from the date of receipt of request, such transfer shall be as per transparent contractual terms in consonance with law.
(c) In the matter of recovery of loan, the company would adopt legally valid processes and not resort to undue harassment or use of force viz. persistently bothering the borrower at odd hours, use of muscle power for recovery of loans etc.
(X) Grievance Redressal
Disputes arising out of decision of the company’s functionaries would be disposed of at the next higher level.
Grievance if any in connection with the code should be addressed to Mr. Avinash Chandra, Company Secretary, in writing at the Registered Office of the Company, at M-6, IInd Floor, M-Block Market, Greater Kailash-II, New Delhi – 110048.
The Company shall display at the prominent place of its business, the name and contact details of the Grievance Redressal Officer of the Company and the concerned officer of the RBI for redressal of complaints against the Company.
(a) A review of compliance of the Code and the functioning of grievance redressal mechanism would be done by the Board of Directors once in 12 months.