This Fair Practices Code is aimed to provide to all the stake holders, especially customers effective overview of practices followed by the Company in respect of financial facilities and services offered by the Company to its Customers. This Fair Practices Code has been prepared taking in to account the “Guidelines on Fair Practices Code for NBFCs” issued by the Reserve Bank of India and aims to enable customers to take informed decisions in respect of the facilities and services offered by the Company.
I. Objectives of the Code
This Code has been drawn up to:
a. Provide to the customers effective overview of practices followed by the Company in respect of financial facilities and
services offered by the Company to its Customers;
b. Enable customers to take informed decision about the financial facilities and services offered by the Company;
c. Promote good, fair, transparent and trustworthy practices by setting minimum standards in dealings with customers;
d. Enable customers to have better understanding of what they can reasonably expect of the services offered by the Company;
e. Reckon with market forces, through competition and strive to achieve higher operating standards;
f. Foster fair and cordial relationship between the customers and the Company.
II. Applications for loans and their processing
(a) All communications to the borrower shall be in the vernacular language or a language as understood by the borrower
(b) Loan application forms issued by the Company shall include necessary information which affects the interests of the
borrower and shall indicate the documents required to be executed/submitted by the borrower.
(c) If any additional documents/information are required from the Customer, same shall be communicated to the Customer
III. Loan Appraisal and terms/conditions
a. The borrower shall be given a loan sanction letter and copy of the loan document together with annexures/enclosures
quoted therein in vernacular language or a language as understood by the borrower which shall include the details of the
loan such as amount sanctioned, annualized interest rate, method of application thereof and any other terms and
b. The penal interest that will be charged for late payment shall be mentioned in bold letters in the sanction letter/loan
c. An acknowledged copy of the sanction letter shall be kept as part of the document.
d. Subject to receipt of all the requisite documentation and information and creation of charge over the security, loan applications shall be disposed of in the normal course on the same day of receipt of the application form complete in all respects. . However, if there is any delay in sanctioning the loan beyond the period of 1 day due to reasons like field verification etc, customer shall be kept informed of the status of his application.
IV. Disbursement of loans/ Changes in terms and conditions
a. The loan shall be disbursed on executing the necessary documents and completion of the formalities regarding creating a charge over the security offered by the borrower. Any change in the terms and conditions including interest rates, service charges, prepayment charges etc. shall be informed to the borrower in the vernacular or a language known to the borrower. Any changes in interest rates and charges shall be only prospective. A suitable condition in this regard shall be incorporated in the loan document obtained from the borrower.
b. Decision to recall/accelerate payment or performance shall be as per the covenants in the loan document.
c. The Company shall 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 the 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 the Company is entitled to retain the securities till the relevant claim is settled / paid.
V. Rate of Interest
a. The Company shall frame appropriate internal principles and procedures for determining the interest rates and processing and other charges, if any and also to ensure that they are not excessive. The Company shall, at the time of disbursal, ensure that the interest rate and other charges, if any, on loan and advances are in strict adherence to above referred internal principles and procedures.
b. The rate of interest will be annualized rates so that the borrower is aware of the exact rates that would be charged on the loan
c. The information published in the website shall be updated whenever there is change in the rates.
d. The rate of interest and the approach for gradation of risk and rationale for charging different rates of interest to different schemes shall be disclosed in the application form and also communicated explicitly in the sanction letter issued to the borrower.
e. The rates of interest and the approach for gradation of risk shall also be made available on the website.
f. If penal interest is to be levied for late payment, it shall be mentioned in bold in the loan agreement.
VI. Policy on KYC, Appraisal, Insurance, Storage of Securities, Auction etc.
The Company shall put in place a policy duly approved by the Board covering the following aspects:
a. Adequate steps to ensure that the KYC guidelines stipulated by RBI are complied with and to ensure that adequate due diligence is carried out on the customer before extending any loan.
b. Proper appraisal procedure for jewellery accepted as collateral security.
c. Declaration shall be obtained from the borrower confirming ownership of gold jewellery.
d. All branches shall have proper storage facility of either Strong Rooms or Safes conforming to ISI Standards of approved make to store the jewellery in safe custody. The keys to the strong room/safe shall be held separately by two officials and the operations thereof shall be done jointly. The staff shall be imparted training on a continuous basis to ensure that the guidelines covering security issues are strictly adhered to. The gold items shall be periodically inspected by the internal auditors to ensure quality, quantity and proper storage
e. The jewellery accepted as collateral security shall be appropriately insured.
f. The auction procedure in case of non – repayment shall be transparent. Prior notice to the borrower shall be given before the auction and there shall not be any conflict of interest. The auction process shall ensure that an arms length relationship in all transactions during the auction is maintained including with group companies and related entities. The details regarding procedure for auction shall be disclosed in the loan document for availing the loan. The auction will be only through auctioneers approved by the Board and the Company shall not participate in the auction. The auction shall be announced to the public by issuing advertisements in at least two newspapers, one in vernacular language and the other in a national daily newspaper.
g. Any fraud in the functioning of the Company shall be enquired into by the appropriate authority and suitable punitive measure shall be taken by the appropriate disciplinary authority. Any review of the decision of the disciplinary authority shall be carried out by the Managing Director
VII. Grievance Redressal Mechanism
Towards ensuring redressal of disputes arising out of decisions of the functionaries of the Company, the following mechanism is put in place:
a. The decisions of any official below the Branch Manger shall be heard and disposed of by the Branch Manager
b. Decisions of Branch Managers shall be heard and disposed of by the Regional Manager
c. A Customer Grievances Redressal Cell will be formed at the Company’s Head Office at Kochi which will be headed by an official not below the grade of Asst. General Manager who will be designated as the Grievance Redressal Officer by a Management Committee consisting of the Executive Director, Chief General Manager and the General Manager(Operations). Complaints received directly and appeals against the decisions of Regional Managers on complaints handled by him shall be heard and disposed of by the Grievances Redressal Officer.
d. The details of the Grievance Redressal Officer as also that of the Regional Office of the Reserve Bank of India shall be displayed in all the Branches for the benefit of customers.
e. Proper training shall be imparted to staff on an ongoing basis with a view to improving staff behavior and customer service.
f. The compliance of the fair practices code as well as the functioning of the Customer Grievances Redressal Cell shall be reviewed by the Executive Director on a Quarterly basis and a consolidated report of such reviews shall be placed before the Board of Directors.
a. The Company shall refrain from interfering in the affairs of the borrower except for the purposes provided in the terms and conditions of the letter of undertaking (unless new information, not earlier disclosed by the borrower, has come to the notice of the Company).
b. The Company will not entertain any request for transfer of borrowal accounts as this is not practicable in the case of loans granted against collateral of gold jewellery.
c. In the matter of recovery of loans, the Company shall not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans etc. The staff of the Company shall be adequately trained to deal with the customers in an appropriate manner so as to ensure proper behavior.
d. The Company will call delinquent customers between 0900 hrs to 1800 hrs unless special circumstances of the borrower’s business require to call them otherwise outside the hours mentioned.