Fair Practice Code

01 Objectives of the Fair Practices Code

The Code has been adopted:

• To promote good and fair practices by setting minimum standards in dealing with customers;
• To increase transparency so that the customers can have better understanding of what they can reasonably expect of the services;
• To encourage market forces through competition, to achieve higher operating standards;
• To promote a fair and cordial relationship between customers and the Company.

02 Applicability

The Code shall apply to all employees, its agents/representatives/third-party vendors/service providers of the Company and other persons authorized to represent it in the course of its business.

03 Non-Discrimination Policy

The Company will not discriminate between its customers on the basis of gender, physical ability, race or religion. The Company will also not discriminate visually impaired or physically challenged applicants on the ground of disability in extending products, services, facilities, etc. However, this does not preclude the Company from instituting or participating in schemes framed for different sections of the society.

04 Language of the Communication

All required communications by the Company to the borrower will be in the language as understood by the borrower (English or vernacular language).

05 Applications for Loans and Their Processing

• Loan application forms shall include the relevant information which affects the interest of the borrower so that an informed decision could be taken by the borrower. The loan application form shall also indicate the list of documents required to be submitted with the application form.
• Receipt of completed application forms will be duly acknowledged by the Company and will also indicate the approximate time frame within which it will be disposed of by the Company.

06 Loan Appraisal and Terms and Conditions

• It shall be conveyed in writing to the borrower in the vernacular language as understood by the borrower by means of sanction letter or otherwise, the amount of loan sanctioned along with the terms and conditions including annualised rate of interest and method of application thereof.
• The acceptance of these terms and conditions by the borrower shall be kept on the record.
• The information relating to the penalties charged for late repayment shall be mentioned in bold in the loan agreement.
• A copy of the loan agreement as understood by the borrower along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans shall be furnished to the borrower.

07 Penal Charges in Loan Accounts

• Any penalty for non-compliance with material loan terms shall be treated as "penal charges" and shall not be levied as penal interest added to the applicable rate of interest.
• No capitalisation of penal charges shall be made and no further interest shall be computed on such charges; however, normal compounding of interest on the loan account shall remain unaffected.
• No additional component shall be added to the rate of interest, and compliance with these guidelines shall be ensured in both letter and spirit.
• A Board-approved policy on penal charges (or by any other name) shall be formulated and implemented.
• The quantum of penal charges shall be reasonable, proportionate, and non-discriminatory within the same loan or product category.
• In the case of individual borrowers (for non-business purposes), penal charges shall not exceed those applicable to non-individual borrowers for similar defaults.
• The amount and reason for penal charges shall be clearly disclosed in the loan agreement, Key Fact Statement (KFS), and shall also be displayed on the NBFC's website.

08 Disbursement of Loans Including Changes in Terms and Conditions

• The notice to the borrower shall be given in the vernacular language or a language as understood by the borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc.
• Changes in interest rates and other charges shall be with prospective effect only.
• Any changes in the terms and conditions shall be made effective only if such a condition is incorporated in the loan agreement.
• Decision to recall any loan / accelerate payment shall be done in accordance with the terms and conditions of the loan agreement.
• All underlying securities shall be released, as per the request of the borrower, after the full repayment of the loan along with all other charges as per the terms of the loan agreement and subject to exercise of any right of lien/set off, for which a notice shall be given to the borrower with full details.

09 General Provisions

• The Company shall refrain from interference with the business of the borrowers except under the terms and conditions of the loan agreement (unless new information, not disclosed earlier by the borrower, has come to the notice of the Company).
• Where the borrower insists on transferring the loan, the consent or otherwise the objection if any, would be conveyed within 21 days from the date of receipt of such request of the borrower. Such transfer will be as per the terms and conditions of the loan in consonance with law.
• For recovery of loan, the Company will not resort to undue harassment and will follow procedures adopted internally by the Company within the applicable legal framework.
• The Company shall not charge foreclosure charges / pre-payment penalties on any floating rate term loan sanctioned for purposes other than business to individual borrowers.
• The Company will ensure that the staff are trained to deal with the customers in an appropriate manner.

10 Grievance Redressal Mechanism

The Company shall have in place a Board approved grievance redressal mechanism which shall ensure that all the disputes arising out of the decisions of the lending business are heard and disposed of at least at the next higher level.

11 Interest Charges

• To ensure that the customers are not charged excessive interest rates and charges on loans and advances by the Company, the Board adopted Interest Rate Model shall be adopted which shall take into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances.
• The rate of interest and the approach for gradations of risk and rationale for charging different rate of interest to different categories of borrowers shall be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter.
• The rates of interest, the approach for gradation of risks, and the annualised rate applicable to the account shall be made available on the Company's website.
• Appropriate internal principles and procedures shall be laid down by the Company for determining interest rates and processing and other charges, keeping in view the Fair Practices Code and the need for transparency in the terms and conditions of the loans.

12 Data Privacy & Confidentiality

The Company shall treat all customer information as confidential and shall not disclose the same to any third party except where required by law or with borrower consent.

13 Loan Facilities to the Physically/Visually Challenged

• The Company shall not discriminate against physically or visually challenged applicants while extending any products or loan facilities on the grounds of disability.
• All branches of the Company shall provide all possible assistance to such persons for availing various business and financial facilities.
• The Company shall include a dedicated training module on the rights of persons with disabilities, as guaranteed under law and international conventions, in all employee training programmes.
• The Company shall ensure proper redressal of grievances of persons with disabilities through its existing Grievance Redressal Mechanism.

14 Periodical Review

A periodical review of the Fair Practices Code and functioning of the grievances redressal mechanism at various levels of management would be undertaken by the Company at yearly intervals.