A. (i) Applications for loans and their processing
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(a) |
All communications to the borrower shall be in the vernacular language
or a language as understood by the borrower. |
(b) |
Loan application forms shall 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 may
indicate the documents required to be submitted with the application
form. |
(c) |
The Company shall issue an acknowledgement receipt for all loan
applications. Loan applications shall be disposed off within 15 days or
such extended time as may be mutually agreed between the borrower
and the Company from the date of receipt of the application form
complete in all respects.
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(ii) Loan appraisal and terms/conditions
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(a) |
The Company shall 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 alongwith the terms and
conditions including annualised rate of interest and method of
application thereof. |
(b) |
The Company shall obtain an acceptance from the borrower on the said
sanction letter and shall maintain a record of such acceptance. |
(c) |
The Company shall furnish a copy of the loan agreement (in vernacular
language or a language as understood by the borrower) alongwith a
copy each of all enclosures quoted in the loan agreement to all the
borrowers at the time of sanction/ disbursement of loans. The said loan
agreement or enclosures quoted shall include all the terms and conditions
including rate of interest on which the loan is granted. The loan
agreement shall also mention the penal interest charged for late
repayment in bold letters. |
(d) |
The disbursement of loan shall be done upon compliance of all the terms
and conditions of the sanction by the borrower.
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(iii) Disbursement of loans including changes in terms and conditions
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(a) |
The Company shall give 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. The Company will also ensure that
changes in interest rates and charges are effected only prospectively. A
suitable condition in this regard shall be incorporated in the loan
agreement. |
(b) |
Decision to recall / accelerate payment or performance under the
agreement shall be in consonance with the loan agreement. |
(c) |
The Company shall release all securities on repayment of all dues or on
realisation of the outstanding amount of loan subject to any legitimate
right or lien for any other claim which 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 Company is entitled to retain the
securities till the relevant claim is settled/paid.
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(iv) General
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(a) |
The Company shall 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,
should 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 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 Company shall adequately
train its staff to deal with the customers in an appropriate manner. |
(d) |
The Company may arrange for enforcing security charged to it of the
delinquent borrower, if required, with an aim only to recover dues and not
be aimed at whimsical deprivation of the property. The Company shall
also ensure that the entire process of enforcing its security, valuation and
realisation thereof be fair and transparent.
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(v) Complaint Redressal Mechanism
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(a) |
If complaint is received in writing or over phone, the Company shall give
complaint number which would be referred to in future. The Company
shall also maintain a Complaint register. |
(b) |
After examining the matter, the Company shall endeavour to send the
customer its response within 21 days and intimate the customer how to
escalate the complaint to higher level, if he is not satisfied with the
response |
(c) |
In case the complaint requires more time then the same would be
informed to the customer. Customer would be updated at regular
intervals regarding the status of the same. |
(d) |
The grievance redressal mechanism within the organisation will be
explained to the customer to resolve any dispute. Such a mechanism
would ensure that all disputes arising out of decisions of the functionaries
are heard and disposed off at least at the next higher level. A complaint
of misconduct against an official of the Company shall be redressed by
next level of authority. |
(e) |
The Company shall request the customer to provide feedback on the
service rendered. This can be done through direct contact by staff or
through specific customer satisfaction surveys that may be conducted
from time to time. |
(f) |
The Board of Directors shall provide for periodical review of the
compliance of the FPC and the functioning of the grievances redressal
mechanism at various levels of Management. A consolidated report of
such reviews may be submitted to the Board of Directors of the Company
at regular intervals, as may be prescribed by it.
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(vi) Internal principles and procedures for determining and ensuring the interest
rates and processing and other charges
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(a) |
As per the directions issued by RBI in its Circular No. 95 dated May 24,
2007, the Company has framed appropriate internal principles and
procedures for determining and ensuring that the interest rates and
processing and other charges are not excessive. |
(b) |
The Directors of the Company had passed a resolution on April 18, 2012,
that the Company shall not charge interest exceeding Cost of Funds + 3%
or SBI + 3% whichever is higher on the loans and advances given by the
Company. |
(c) |
The Company shall, at the time of disbursal, ensure that the interest rate
and processing and other charges on loan and advances are in strict
adherence to above referred internal principles and procedures
conforming to normal financial practice.
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(vii) Regulation of excessive interest
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In terms of notification No. DNBS. 204 / CGM (ASR)-2009 dated January 2,
2009, issued by RBI, the Company has adopted the Interest Rate Policy for
regulation of excessive interest. The features of the said policy are mentioned
hereunder:
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(a) |
The Company shall calculate the base interest rate after taking into
account relevant factors such as cost of funds, margin, risk premium, other
costs such as administrative expenses and profit margin. The base interest
rate shall be reviewed periodically. |
(b) |
The interest rate applicable to each loan account shall be assessed
based on multiple parameters like tenure, borrower’s profile, borrower’s
repayment capacity based on the cash flows, loan to value of the asset
financed, type of collateral security provided by the borrower, past
repayment track record of the borrower, etc. |
(c) |
The Company shall disclose to the borrower or customer the rate of
interest and the approach for gradations of risk and rationale for charging
different rate of interest to different categories of borrowers in the
application form and communicate the same explicitly in the sanction
letter. |
(d) |
The Company shall intimate the borrower, the loan amount; annualize rate
of interest and method of application at the time of sanction of the loan
alongwith the tenure and amount of monthly/quarterly installment. The
other charges such as processing fees, additional interest charged on
delayed payments and cheque bouncing charges shall also be
mentioned in the Loan Agreement. |
(e) |
The Company shall mention the annualised rate of interest so that the
borrower is aware of the exact rates that would be charged to the
account.
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(viii) Repossession of vehicles
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If the Company finances loan to the borrower for buying vehicles, then it shall
have a built-in re-possession clause in the contract/ loan agreement with the
borrower which shall be legally enforceable.
To ensure transparency, the terms and conditions of the contract/loan
agreement shall also contain provisions regarding:
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(i) |
notice period before taking possession; |
(ii) |
circumstances under which the notice period can be waived; |
(iii) |
the procedure for taking possession of the security; |
(iv) |
a provision regarding final chance to be given to the borrower for
repayment of loan before the sale / auction of the property; |
(v) |
the procedure for giving re-possession to the borrower and |
(vi) |
the procedure for sale / auction of the property.
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A copy of such terms and conditions shall be made available to all the
borrowers alongwith a copy of loan agreement alongwith a copy of each of
all enclosures quoted in the loan agreement to all the borrowers at the time
of sanction / disbursement of loans, which may form a key component of
such contracts/loan agreements.
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(ix) Force Majeure
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The various commitments outlined and made by the Company are
applicable under the normal operating environment. In the event of Force
Majeure, the Company will not be able to fulfill the commitments under the
FPC to the entire satisfaction of the customer/s, stakeholders and the public
in general.
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