FAIR PRACTICES CODE
Fair Practice Code
The Fair Practices Code (“FPC”) has been devised by Uni-Com Fincorp Private Limited (“UFPL” 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.
In terms of the RBI Directions and considering the nature of the business, it is proposed to adopt the following Fair Practice Code (Code) for the Company’s lending activities applicable for all lending products.
The Fair Practice Code (‘FPC”) 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. Uni-Com Fincorp Private Limited 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.
3. Objective of the Code
The Key objective of the Code-
a) To ensure Fair Practices while dealing with the customers and promote good, fair and trustworthy practices by setting up minimum standards;
b) To ensure greater transparency enabling customers in having a better understanding of the product and taking informed decisions;
c) To ensure that clients are advised of the terms and conditions of products/ services provided in a comprehensive manner for their consideration prior to commitment of a transaction;
d) To monitor and administer client accounts in a fair and transparent manner consistent with the terms and conditions of the facility provided;
e) Recovery and enforcement, where necessary, is conducted following due process of law.
f) To ensure compliance of applicable regulations prescribed by RBI relating to fair practices.
4. Applicability of the Fair Practice Code
I. Application 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 should 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.
The NBFCs should devise a system of giving acknowledgement for receipt of all loan applications. Preferably, the time frame within which loan applications will be disposed of should also be indicated in the acknowledgement
II. Loan Appraisal & terms/ conditions
The NBFCs should 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 along with the terms and conditions including annualized rate of interest and method of application thereof and keep the acceptance of these terms and conditions by the borrower on its record. As complaints received against NBFCs generally pertain to charging of high interest /penal interest charged for late repayment in bold in the loan agreement.
It is understood that in a few cases, borrowers are not fully aware of the terms and conditions of the loans including rate of interest at the time of sanction of loans, either because the NBFC does not provide details of the same or the borrower has no time to look into detailed agreement.
Not furnishing a copy of the loan agreement or enclosures quoted in the loan agreement is an unfair practice and this could lead to disputes between the NBFC and the borrower with regard to the terms and conditions. NBFCs are, therefore, advised to furnish a copy of the loan agreement as understood by the borrower along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.
III.Disbursement of loans including changes in terms & conditions
a) The NBFCs should 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. NBFCs should also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard should be incorporated in the loan agreement.
b) Decision to recall / accelerate payment or performance under the agreement should be in consonance with the loan agreement.
c) NBFCs should 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 NBFCs 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 NBFCs are entitled to retain the securities till the relevant claim is settled/paid.
a) NBFCs should 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 NBFC, 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 NBFCs should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans etc. As complaints from customers also include rude behavior from the staff of the companies. NBFCs shall ensure that the staff are adequately trained to deal with the customers in an appropriate manner.
V. Terms & Conditions
a) When a customer accepts a product or service for the first time, the Company will provide the customer with the Rules and Regulations that are relevant to the product / service.
b) All Terms and Conditions will be fair and will set the customers rights and responsibilities clearly and in plain language, the Company will use legal or technical language only where necessary.
c) The Company will make available any charges applicable to products and services applicable. If the Company increases any charges or introduces a new charge.
The Company will notify the same to the customers. e. The Company will provide the terms and conditions in respect of any product or service whenever a customer requests for the same.
a) Unless authorized by the customer, the Company shall treat all the personal information of its customers as private and confidential.
b) The Company may not reveal transaction details of the borrowers to any other entity including within the group except under the following exceptional circumstances: –
• The Company has its duty to provide the information by statutory or regulatory laws including information to statutory bodies, law enforcement agencies, Credit Information Companies like CIBIL etc., RBI and or other banks/financial institutions, any other state, central or any other regulatory body, including courts and tribunals having jurisdiction. Customer has authorized the Company in writing, to provide such information.
• If it is in the public interest to disclose such customer information.
• If its interest requires us to provide this information (e.g. Fraud prevention).
• If the borrower defaults to meets its obligation towards the Company.
VII. Interest Rate
a) The Company will ensure that it will not charge excessive interest rates to its borrowers.
b) The Company would arrive at the interest rate for its clients taking into account the broad parameters such as risk profile of the client, interest rate trends prevailing in the money market, cost of funds, collateral security offered by client/ structure of the deal and Interest rate charged by competitors.
c) Interest rates would be on an annualized basis and would be communicated explicitly in the sanction / welcome letter or MITC or otherwise letter.
d) Pursuant to notification no. DNBS.204/CGM (ASR)-2009 dated 2 January 2009 in respect to regulation of excessive interest charged by NBFCs, the Company has adopted an Interest Rate Policy taking into account relevant factors such as cost of funds, margin and risk premium, etc. to determine the rate of interest to be charged for loans and advances. The Interest Rate Policy also covers the rate of interest and the approach for gradation of risk and rationale for charging different rate of interest to different categories of borrowers and same is published and disseminated on the web-site of the Company. The information published in the website or otherwise published shall be updated whenever there is a change in the rates of interest.
VIII.Responsibility of Board of Directors
The Board of Directors of the Company has adopted the appropriate grievance redressal mechanism through a distinct Grievance Redressal Policy within the organization. Such a mechanism shall ensure that all disputes arising out of the decisions of lending institutions’ functionaries, complaints relating to updating/alteration of credit information and complaints pertaining to outsource services are heard and disposed of at least at the next higher level. The Board of Directors shall be provided with consolidated periodical review of the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of management.
In compliance with the guidelines on ‘Fair Practices Code’, the Company shall publish and disseminate the Fair Practices Code in English on the web-site of the Company and in English, Hindi and vernacular language at all the branches of the Company, and any borrower or client who wishes to obtain the same may request the Company to provide thereof.
X. Review and Amendments
This policy shall be reviewed and updated periodically for any changes. “In case any amendments issued by Reserve Bank of India in form of clarifications, circulars or guidelines or by any other name, which may not be consistent with the current provisions laid down under this Code, then the provisions of such amendments / clarifications, shall prevail upon the provisions contained in the RBI communication and the same shall stand amended accordingly effective from the date as laid down under such RBI communique.”