Introduction:
The Reserve Bank of India (RBI) has established a comprehensive framework for Fair Practices Code applicable to Non-Banking Finance Companies (NBFCs), as outlined in Master Circular RBI/2015-16/16 DNBR (PD) CC.No.054/03.10.119/2015-16, issued on July 01, 2015, and subsequent directives, including RBI Master Direction RBI/DNBR/2016-17/45 Master Direction DNBR. PD. 008/03.10.119/2016-17 – Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 dated September 01, 2016, along with subsequent amendments.
This Fair Practices Code provides explicit and transparent guidelines governing the transactions of Shubharambh capital Finance private Limited (“the Company”) with its borrowers, co-applicants, and guarantors, collectively referred to as “borrower” or “applicant” in the document, as context dictates. The policy applies to all lending products offered by the Company.
Additionally, the code incorporates a robust mechanism for Customer Grievance Redressal. The Company endeavours to align with regulatory guidelines mandated by the regulator in a timely manner through this code.
Loan Applications and Processing:
The loan application forms will incorporate relevant/necessary information that impacts the borrower’s interests to ensure fair practice and transparency. These forms will clearly specify the documents required for submission along with the application.
All communication with the borrower will be conducted in a language easily understood by them or in the vernacular language.
Upon receiving the application form, an acknowledgment receipt will be provided to the borrower, indicating the timeframe within which the loan applications will be processed.
In the event that additional details or documents are necessary, borrowers will be promptly informed of the same.
Loan Appraisal and Terms:
Upon loan approval, the Company will communicate the details to the applicant through a sanction letter cum agreement or through alternative means. This document will specify the loan amount, annualized interest rate, its application method, and other associated terms and conditions.
The sanction letter will be provided in writing to the borrower, and a duly accepted copy of the terms and conditions will be retained in the records.
Penalties for late installment repayment will be clearly outlined in bold within the loan agreement.
The Company will provide borrowers with a copy of the loan agreement, along with all the enclosures referenced in the agreement, at the time of loan sanction or disbursement.
Disbursement of loans and changes in terms and conditions :
In the event of any alteration/ modification in the terms & conditions including interest rates, disbursement schedules, prepayment charges, service charges etc., a notice/ intimation shall be provided to the borrower. Any modifications in charges and interest rates shall be effected only prospectively and a suitable condition/ clause in this regard shall be incorporated in the loan agreement. Post-disbursement supervision of all the loans shall be as per the normal business practice, terms of sanction and guidelines as issued by the RBI from time-to-time. The decision to accelerate/recall performance or payment under the agreement shall only be carried out in accordance with the loan agreement.
General:
There shall be no interference in the borrower’s affairs unless expressly stated in the terms and conditions of the loan agreement, or unless the Company discovers new information not previously disclosed by the borrower.
If the Company receives a request from the borrower for the transfer of their loan account, a response regarding objection or consent shall be provided within 21 days from the date of receiving the request.
Any such transfer will adhere to transparent contractual terms in compliance with the law.
The Company is committed to avoiding undue harassment, such as the use of physical force for loan recovery or persistent disturbances to borrowers during unconventional hours. Such behaviour is explicitly prohibited by the Company’s code of conduct.
Ongoing training will be provided to all staff members engaged in client communication to ensure they interact with customers in a respectful and appropriate manner.
The Company will not impose foreclosure charges or pre-payment penalties on any floating-rate term loan granted for non-business purposes to individual borrowers.
Repossession:
The Company has included the repossession clause in the loan agreement with the borrower that would be legally enforceable.
To ensure transparency, the terms and conditions of the contract/loan agreement will include provisions regarding:
- Notice period before taking possession;
- Circumstances under which the notice period can be waived;
- The procedure for taking possession of the security;
- A provision regarding final chance to be given to the borrower for repayment of loan before the sale / auction of the asset.
- The procedure for giving repossession to the borrower and
- The procedure for sale / auction of the property.
Interest Charges:
- The Company has established internal principles and procedures for determining interest rates, processing fees, and other charges.
- The Company employs an interest rate model that considers factors such as the cost of funds, margin, risk premium, etc., to determine the applicable interest rate for loans and advances.
- For digital loan products, the Company may necessitate the disclosure of the interest rate, along with all other associated costs and charges, presented as an Annual Percentage Rate (APR).
- Detailed information regarding the interest rates implemented by the Company can be found in the Interest Rate Policy, as adopted and accessible on the Company’s website.
Grievance Redressal Mechanism:
- The Company is committed to delivering excellent customer service and is consistently working towards establishing a robust and efficient customer service platform aligned with the grievance redressal mechanism policy approved by the Board.
- Contact details for various points of contact within the grievance redressal mechanism will be made available on the website for the convenience of customers.
- The Company will ensure that Digital Lending Aggregators (DLAs) and Loan Service Providers (LSPs) appoint an appropriate nodal grievance redressal officer to address complaints and issues related to fintech or digital lending raised by borrowers. The name and details of such officers, along with the grievance redressal process, will be outlined on the websites of the LSPs and DLAs.
Review:
The Company shall abide by this Fair Practices Code following the spirit of the Code and in the manner it may be applicable to its business.
The Company shall put the above Fair Practices Code outlined hereinabove on its web site, for the information of various stakeholders. The Company would also review and refine the Code, as may be required periodically –based on its own experience and fresh guidelines, if any, to be issued by the Reserve Bank of India in this regard.
Amendment:
This policy is subject to periodic amendments, restatements, and updates. Any such changes will be deemed effective from the date of adoption by the Board.