Fair Practice Code

 

Applications for loans and their processing

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

(b) 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 informed decision can be taken by the borrower. The loan application form will indicate the documents required to be submitted with the application form.

(c) 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.
 

Loan appraisal and terms/conditions

 
The company will convey 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 annualized rate of interest and method of application thereof and keep the acceptance of these terms and conditions by the borrower on its record. Company will mention the penal interest charged for late repayment in bold in the loan agreement.

Company will furnish a copy of the loan agreement preferably in the vernacular language as understood by the borrower along with a copy each of all enclosures quoted in the loan agreement to the borrowers at the time of sanction / disbursement of loans.
 

Disbursement of loans including changes in terms and conditions

 
(a) The company will notice to the borrower in the vernacular language as understood by the borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc. Company 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.

(b) Decision to recall / accelerate payment or performance under the agreement will be in consonance with the loan agreement.

(c) Company will release all securities on repayment of all dues or on realization of the outstanding amount of loan subject to any legitimate right or lien for any other claim Company may have against borrower. If such right of set off is to be exercised, the borrower shall be given notice about the same with full particulars about the remaining claims and the conditions under which Company is entitled to retain the securities till the relevant claim is settled / paid.
 

General

 
a) 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).

b) In case of receipt of request from the borrower for transfer of borrowal 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 request. Such transfer will be as per transparent contractual terms in consonance with law.

c) 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. Company will ensure that the staff are adequately trained to deal with the customers in an appropriate manner.
 
V The Board of Directors of Company will also lay down the appropriate grievance Redressal Mechanism within the organization to resolve disputes arising in this regard. Such a mechanism will ensure that all disputes arising out of the decisions of company' functionaries are heard and disposed of at least at the next higher level. The Board of Directors will also provide for periodical review of the compliance of the Fair Practices Code and the functioning of the grievances Redressal mechanism at various levels of management. A consolidated report of such reviews will be submitted to the Board at quarter end.

VI Fair Practices Code (which will preferably in the vernacular language as understood by the borrower) based on the guidelines outlined hereinabove will be put in place by all Company will have the freedom of drafting the Fair Practices Code, enhancing the scope of the guidelines but in no way sacrificing the spirit underlying the above guidelines. The same should be put up on their web-site, if any, for the information of various stakeholders. Boards of Company will to lay out appropriate internal principles and procedures in determining interest rates and processing and other charges. In this regard the guidelines indicated in the Fair Practices Code about transparency in respect of terms and conditions of the loans will to be kept in view.

VII Company will have a built in re-possession clause in the contract/loan agreement with the borrower which will be legally enforceable. To ensure transparency, the terms and conditions of the contract/loan agreement will also contain provisions regarding:
(a) notice period before taking possession;
(b) circumstances under which the notice period can be waived;
(c) the procedure for taking possession of the security;
(d) a provision regarding final chance to be given to the borrower for repayment of loan before the sale / auction of the property;
(e) the procedure for 5 giving repossession to the borrower and
(f) the procedure for sale / auction of the property.
Company will invariably furnish a copy of the loan agreement 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.