Fair Practice Code
Fair Practice Code approved by the Board of Directors.
In pursuance of various Circulars as summarised vide Master Circular issued vide DNBR (PD) CC No. 054/03.10.119/2015-16 by the Reserve Bank of India the following Fair Practice Code has been approved by the Board of Directors of M/s. The Bharat Corporation (Kunnamkulam) Private Limited at the meeting held on 03 rd August, 2019.
Application for loans and their processing:
- All communications to the borrower shall be in the vernacular language or a language as understood by the borrower.
- Loan application is attached with all the terms and conditions of the Loan and particulars of documents to be submitted along with the application and every borrower is expected to understand these terms and conditions before furnishing the loan application. If any clarity or explanation requires, the applicant shall contact concerned Branch Manager wherein the application submits.
- The borrower shall be issued acknowledgement for receipt of loan application, indicating the last date before which decision on the application will be intimated to the applicant.
- In accordance with the company’s risk assessment procedures, each loan application submitted by the borrower will be processed and suitable margin/securities will be stipulated based on the risk assessment and company’s credit policy guidelines.
- Loan sanction letter shall contain the amount of loan sanctioned, rate of interest per annum, method of calculation of interest, security for the loan and all other terms and conditions of the loan, particularly penal interest charged for late repayment to be shown in bold letters, and the applicant shall accept in writing all the terms and conditions of Loan as above, along with execution of loan documents.
- At the time of sanction/disbursement of loans, the borrower shall be given a copy of loan agreement preferably in the vernacular language as understood by the borrower along with a copy each of all enclosures quoted in the loan agreement.
- The borrower shall be given notice in advance in vernacular language or a language as understood by the borrower, of any change in interest rate, period of loan and any other terms and conditions of loan. It is particular that any of the above changes shall be effective only prospectively i.e. after the issue of above notice and as incorporated in the loan agreement.
- Decision to recall/accelerate payment or performance under the loan agreement shall only be in line with the loan agreement.
- The company shall release all securities for the loan immediately to the concerned borrower on repayment of all dues regarding the loan, subject to the right of the company to keep lien on such securities for any other claims of the company from the concerned borrower. In case the lien as above is kept by the company, the borrower shall be informed full particulars about such claims to the company and right of the company to retain the lien and/or security till the relevant claim is settled.
- In case the borrower requests for transfer of loan amount, the company shall consider or intimate the borrower the decision within 21 days from the receipt of the request.Such transfer shall be as per transparent contractual terms in consonance with law.
- The company will ensure to adopt only legal steps for recovery of loan and if in case the borrower has any bitter experience, he shall immediately inform the same to the concerned Manager where the loan is granted.
- The company would refrain from interference in the affairs of the borrowers except for what is provided in the terms and conditions of loan agreement (unless new information, not earlier disclosed by the borrower, has come to the notice of the borrower).
- There would not be any undue harassment by persistently bothering the borrowers at odd hours, use of muscle powers for the recovery of loan.
- In case borrower happens to have any grievance, he may inform the matter to the officer in charge of grievance cell, at the Head Office of the Company either by writing, Email or by telephone.
- If the complaint/dispute is not redressed within a period of one month, the customer may appeal to the Officer-in-Charge of the Regional Office of DNBS of RBI, under whose jurisdiction the registered office of the company falls. The Address of RBI is as follows:
- The company will publish all the terms and conditions of loan in its website and update any changes therein before implementation.
- The rates of interest and the approach for gradation of risks shall also be made available on the web-site of the companies or published in the relevant newspapers. The information published in the website or otherwise published should be updated whenever there is a change in the rates of interest.
- The terms and conditions of the loan shall include under a separate head, the conditions of repossession of vehicle in case of default such as notice period before taking possession, circumstances under the notice period is waived, procedure for taking possession, notice to the borrower before effecting sale/auction, after repossession procedures for sale/auction etc.
- Every loan application shall be filled in with all requisite details so as to enable to dispose the application in time.
- All information of the borrower will be confidential.
- Company will ensure to insure all the securities provided by the borrower for the loan at the cost of borrower. But the Borrower shall be entitled to insure the assets at his option subject to the satisfaction of the company.
- The FPC in vernacular language shall be displayed by an NBFC-MFI in its office and branch premises. A statement shall be made in vernacular language and displayed by NBFC-MFIs in their premises and in loan cards articulating their commitment to transparency and fair lending practices.
- Field staff shall be trained to make necessary enquiries with regard to existing debt of the borrowers. Training if any, offered to the borrowers shall be free of cost. Field staff shall be trained to offer such training and also make the borrowers fully aware of the procedure and systems related to loan / other products.
- The effective rate of interest charged and the grievance redressal system set up by the NBFC-MFI should be prominently displayed in all its offices and in the literature issued by it (in vernacular language) and on its website. A declaration that the MFI will be accountable for preventing inappropriate staff behaviour and timely grievance redressal shall be made in the loan agreement and also in the FPC displayed in its office/branch premises.
- As a conclusion, In the loan agreement the following shall be disclosed:
- The loan card should reflect the following details as specified in the Non-Banking Financial Company - Micro Finance Institutions (Reserve Bank) Directions, 2011.
- Recovery should normally be made only at a central designated place. Field staff shall be allowed to make recovery at the place of residence or work of the borrower only if borrower fails to appear at central designated place on 2 or more successive occasions.
- While lending to individuals against gold jewellery, it shall be ensured to comply the following:
- Company will obtain an application in vernacular language form the prospective borrower for availing unsecured loan which will contain the terms of repayment, rate of interest and documents to be executed by the borrower in favour of the company.
- Company will issue a loan sanction card showing the terms of repayment, rate of interest and documents such as promissory note to be executed by the borrower.
- Company may collect from the borrower the details of assets owned by the borrower to take necessary legal action in the event of default.
- Company will also insist periodical confirmation from the borrower to keep the unsecured loan alive from time barring.
Loan appraisal and terms and conditions:
Grievance Redressal Mechanism:
Address of the Head Office : The Bharat Corporation (Kunnamkulam) Pvt Ltd
Room No: VI/393-5(1),
Al-Salam Shopping complex,
Townhall Road,
Kunnamkulam,
Thrissur-680503.
Email id : bharatcorporationkkm@gmail.com
Telephone : 04885 22 22 78 ,Mob:- 9497553000
The Officer in Charge, Department of Non Banking Supervision, Reserve Bank of India, Bakery Junction, PB No.6507, Thiruvananthapuram – 695033.
General:
a. All the terms and conditions of the loan.
b. That the pricing of the loan involves only three components viz; the interest charge, the processing charge and the insurance premium (which includes the administrative charges in respect thereof)
c. That there will be no penalty charged on delayed payment.
d. That no Security Deposit / Margin is being collected from the borrower.
e. That the borrower cannot be a member of more than one SHG / JLG.
f. The moratorium between the grant of the loan and the due date of the repayment of the first instalment (as guided by the NBFC-MFIs(Reserve Bank) Directions, 2011).
g. An assurance that the privacy of borrower data will be respected.
a. The effective rate of interest charged.
b. All other terms and conditions attached to the loan.
c. Information which adequately identifies the borrower.
d. Acknowledgements by the NBFC-MFI of all repayments including instalments received and the final discharge.
e. The loan card should prominently mention the grievance redressal system set up by the MFI and also the name and contact number of the nodal officer.
f. Non-credit products issued shall be with full consent of the borrowers and fee structure shall be communicated in the loan card itself.
g. All entries in the Loan Card should be in the vernacular language.
Non-coercive Methods of Recovery:
Conditions for repossession of property financed by the Company:
Loan agreements have a built in re-possession clause with the borrower which is legally enforceable. To ensure transparency, the terms and conditions of the contract/loan agreement contains provisions regarding:
(a) Notice period before taking possession;
(b) Circumstances under which the notice period can be waived;
(c) The procedure for taking possession of the security;
(d) A provision regarding final chance to be given to the borrower for repayment of loan before the sale/ auction of the property;
(e) The procedure for giving repossession to the borrower; and
(f) The procedure for sale / auction of the property. Loan agreement copy is made available to the borrower post disbursement of loans.
Lending against collateral of gold jewellery:
a. Customer’s identity and address proofs are to be obtained as per the RBI’s KYC guidelines, along with the Loan Application.
b. Loan application and enclosures have to be verified with the original records by the approved agencies.
c. Assaying procedures of the jewellery are to be complied with.
d. The loan disbursing authority shall satisfy about the ownership of jewellery.
e. Loans against jewellery shall be granted only by the office where such office has proper locker facility, insurance coverage and trained staff.
f. Internal Auditors shall ensure that the procedures are strictly adhered to and jewellery is kept very safely.
g. In default cases, auction of jewellery shall be carried out transparently with notice to the borrower. The Board shall lay down prior policy and procedures for such auction, in the best interest of the customers.
h. The auction should be announced to the public by issue of advertisements in at least 2 newspapers, one in vernacular language and another in national daily newspaper.
i. As a policy the NBFCs themselves shall not participate in the auctions held.
j. Gold pledged will be auctioned only through auctioneers approved by the Board.
Unsecured loans:
For M/s The Bharat Corporation (kunnamkulam) Pvt Ltd
C.A.Ittoop
(Managing Director)
