FAIR PRACTICES CODE
Summary of Policy
|Policy Name||Fair Practice Code|
|Related policies and regulations||RBI Guidelines on Fair Practice Code|
|Issue date||April 2011|
|Effective date||April 2011|
|Date of last review||May 2016|
|Date of next review||May 2017|
|Owner / Contact||DMI Finance Private Limited|
|Approver||Board of Directors of DMI Finance Pvt. Ltd.|
Table of Contents
|i. Key Commitment|
|2||Guidelines on Fair Practices Code for NBFCs|
|A||i. Applications for loans and their processing|
|ii. Loan appraisal and terms/conditions|
|iii. Disbursement of loans including changes in terms and conditions|
|v. Responsibility of Board of Directors|
|vi. Grievance Redressal Officer|
|vii. Language and mode of communicating Fair Practices Code|
|viii. Regulation of excessive interest charged by NBFCs|
|ix. Complaints about excessive interest charged by NBFCs|
|x. Clarification regarding repossession of vehicles financed by NBFCs|
|B||NBFC - MFI|
|C||Lending against collateral of gold jewellery|
|i. Board approved policy for lending against gold|
|ii. Auction Procedure|
The Fair Practices Code (“FPC”)has been devised by DMI Finance Private Limited (“DFPL” or “DMI” or “Company”) in accordance with guidelines issued by The Reserve Bank vide its circular dated September 28, 2006 and subsequent amendments, on Fair Practices Code (FPC) for all NBFCs to be adopted by them while doing lending business. The guidelines inter alia, covered general principles on adequate disclosures on the terms and conditions of a loan and adopting a non - coercive recovery method. The same was revised in view of the recent developments with sector including creation of New Category of NBFCs viz; NBFC - MFI and the rapid growth in NBFCs lending against gold jewellery. Revised circular was issued on March 26, 2012
DMI has put in place the FPC with an endeavor to achieve synchronization of best practices when the Company is dealing with its stakeholders such as customers, employees, vendors, etc. The Company’s Fair lending practices shall apply across all aspects of its operations including marketing, loan origination, processing, and servicing and collection activities. DMI’s commitment to the FPC would be demonstrated in terms of employee accountability, monitoring and auditing programs, training and technology.
The Company’s Board of Directors and the management are responsible for establishing practices designed to ensure that its operations reflect a strong commitment to fair lending and that all employees are aware of that commitment.
The essence of the FPC lies in the following aspects that DFPL shall strive to follow in spirit and in letter:
a. To provide professional, efficient, courteous, diligent and speedy services.
b. Not to discriminate on the basis of religion, caste, sex, descent in any manner.
c. To be fair and honest in any advertisement and marketing of loan products.
d. To provide customers with accurate and timely disclosure of terms, costs, rights and liabilities as regards loan transactions.
e. If sought, to provide such assistance or advise to customers seeking loans.
f. To attempt in good faith to resolve any disputes or differences with customers by setting up complaint redressal system within the organization.
g. To comply with all the regulatory requirements in good faith.
h. Seek to use governance structures that provide appropriate levels of oversight in the areas of audit, risk management and potential conflicts of interest and to implement compensation and other policies that align the interests of owners and management.
i. Seek to confirm that the funds do not flow to companies that utilize child or forced labor or generally maintain discriminatory policies against religion or gender.
j. Ensure compliances relating to Indian regulations prescribed by the Reserve Bank of India (‘RBI’)
2. GUIDELINES ON FAIR PRACTICE CODE FOR DFPL
A. i. Applications for loans and their processing
- All communications to the customer by DFPL shall be in English as it is understood by all customers of DFPL.
- As part of the loan process, to inter alia ensure utmost transparency, DFPL provides all necessary information to the customer along with the term sheet/application/proposal as the case may be including but not restricted to nature of security required ,fees/charges, if any, payable for processing, the non-refundable nature of fees including in the case of non-acceptance of loan proposal, pre-payment options, check list in respect of information/papers required for considering loan and any other matter which effects the interest of the customer so that a meaningful comparison with the terms and conditions offered by other Non Banking Financial Companies (‘NBFCs’) can be made and informed decisi on can be taken by the customer.
- Time - period for disposal of application
|S. No.||Category of Customer and Size of Limit||Time norms for disposal after Submission of all required papers / information sought by the DFPL.|
|1.||For all categories of customers and for any amount of Loan||Time - period upto 60 days or such time as mutually agreed upon with customer.|
- On exercise of choice, the customer would be given the relevant information about the loan product of its choice.
- The customer would be explained the processes involved till sanction and disbursement of loan and would be notified of timeframe within which all the processes will be completed ordinarily.
ii. Loan appraisal terms and conditions
- DFPL shall scrutinize the information submitted by the customer and additional data, if any, required should be called promptly to facilitate expeditious disposal of the loan.
- DFPL shall convey in writing in English as it is understood by all customers of DFPL by means of Sanction letter or Term sheet or any other form of written communication key terms and conditions of the proposed exposure including:
a. the amount of loan sanctioned along with the terms and conditions including annualized rate of interest,
b. details of the default interest / penal interest rates (expressed in percentage per month / annum as the case may be) and the charges payable by the customers in relation to their loan account and method of application there of (penal interest charged for late repayment of loan would be mentioned in bold in the loan agreement)
c. acceptance of terms and conditions and other caveats governing the credit given by DFPL arrived at after negotiation
d. terms of enforcement of security
e. all other information which is relevant from the point of view of the loan to be provided and all the parties involved.
f. wherever possible, reasons for rejection of loan would be conveyed to the customers.
DFPL shall furnish a copy of the loan agreement in English as understood by the borrower along with copy of all relevant enclosures quoted in the loan agreemen to all the borrowers at the time of sanction/disbursement of the loan and shall be duly approved by the customer and countersigned by the authorized officials of DFPL.
iii. Disbursement of loans including changes in terms and conditions
- DFPL shall give notice in English as understood by the customer regarding any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc.
- Changes in the interest rates and charges shall be effected prospectively.
- A suitable condition in this regard shall be incorporated in the loan agreement, as applicable.
- Decision to recall / accelerate payment or performance under the agreement should be in consonance with the loan agreement. Before taking a decision to recall / accelerate payment or performance under the agreement or seeking additional securities, DFPL shall give notice to customers in consonance with the loan agreement in English as may be understood by the customer.
- DFPL 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 DFPL 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 about the remaining claims and the conditions under which DFPL is entitled to retain the securities till the relevant claim is settled/ paid.
- All communication like acceptances (including for amendments or addendum) with the Customer in relation to the sanction / facilities / loan / mandate / proposals shall be in writing and preserved for a minimum period of ten years.
- DFPL will not interfere in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless information, not earlier disclosed by the borrower, has been noticed).
- In case of receipt of request from the borrower for transfer of loan account, the consent or otherwise i.e. objection from DFPL, 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.
- If the customer does not adhere to repayment schedule, a defined process in accordance with the laws of the land will be followed for recovery of dues. The process will involve reminding the customer by sending the notice or by making personal visits and/ or repossession of security, if any. In case of default, DFPL may refer the case to the recovery agent and will inform the customer of the recovery proceedings being initiated. DFPL shall ensure that its process of recoveries will not involve harassment to the Customer. Appropriate instructions will be provided by DFPL to its staff for handling customer queries and grievances cordially.