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.
Annexures None

 

Table of Contents
Para No. Particulars
1 Introduction
  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
  iv. General
  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

 

1. INTRODUCTION

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.

Key Aspects:

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 LimitTime 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.

iv. General

- 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.