The Reserve Bank of India (RBI) has issued guidelines on Fair Practices Code for the NBFCs (NonBanking Finance Companies) vide Master Circular RBI/2015-16/16 DNBR (PD) CC.No.054/03.10.119/2015-16 on Fair Practices Code dated July 01, 2015 read with 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 and amendments thereafter.
This Fair Practices Code lays down transparent and clear guidelines regarding the transactions of the Rapid Investments Ltd. (“the Company) with its borrowers, co-applicants and guarantors (collectively referred to as “borrower” or “applicant” in the rest of this document, as the context requires). This Policy is applicable for all lending products offered by the Company.
The code also places a robust mechanism for Customer Grievance Redressal. Through this code the Company aims to adhere to the regulatory guidelines prescribed by the regulator from time-to-time.
Applications for loans and their processing
The loan application forms shall include relevant/ necessary information which affects the borrower’s interest to bring fair practice and transparency.
This form shall indicate the documents required to be submitted by the borrower along with the application form.
Communication with the borrower shall take place in a language that can easily be understood by the borrower or in the vernacular language.
After the receipt of the application form from the borrower, an acknowledgment receipt indicating the period within which the loan applications will be disposed of, shall be handed over to the borrower.
If any additional details/ documents are required, the same shall be intimated to the borrowers.
Loan appraisal and terms and conditions
The Company, upon approval of the loan, shall convey the applicant through a sanction letter cum agreement or otherwise indicating the amount of loan, annualized rate of interest applicable and method of application thereof, along with the other terms and conditions.
The sanction letter shall be delivered in writing to the borrower and an accepted copy of the terms & conditions through the borrower shall be maintained on record.
Penal interest charged for the late repayment of instalments shall be mentioned in bold in the loan agreement.
The Company shall furnish a copy of the loan agreement, along with all the enclosures quoted in the loan agreement to the borrowers at the time of sanction/disbursement of loans.
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.
All securities pertaining to the loan would be released on receipt of full and final payment of the outstanding amount of loans, subject to any legitimate right or lien, and set-off for any other claim that the company may have against the borrowers. If such right of set-off is to be exercised, the borrower shall be given notice containing full particulars about the remaining claims and the conditions under which the Company is entitled to retain the securities until the relevant claim is settled / paid.
There shall not be any interference in borrower’s affairs except for reasons mentioned in the loan agreement’s terms & conditions unless any new information, which the borrower has not disclosed earlier, has been noticed by the Company.
If the Company is in receipt of a request from the borrower for transferring his loan account, the objection or consent for the same shall be forwarded within 21 days’ from the date of receipt of such request. Any such transfer shall be in accordance with the transparent contractual terms in consonance with law.
The company shall not resort to undue harassment i.e., use of the muscle power for the recovery of the loans, persistently bothering borrowers at odd hours etc., for recovery of loans and such behaviour is also against the Company’s code of conduct.
Ongoing training to all the staff members who communicate with the clients shall be imparted to ensure that they behave with the customers in an appropriate manner.
The Company shall not charge foreclosure charges/ pre-payment penalties on any floating rate term loan sanctioned for purposes other than business to individual borrowers. .
Interest Charged from Borrowers
To ensure that there the Customers are not charged excessive interest rate and charges on loans and advances by the Company, the Board of the Company has adopted a ‘Policy for determining Interest Rates, Processing and Other Charges’ and the same has been put up on Company’s web-site.
The information published in the website or otherwise published shall be updated whenever there is a change in the rates of interest.
Suitable internal procedures and principles in determining processing, interest rates, and the other charges shall be followed in line along with the accepted Company strategies from time-to- time.
Decision to give the loan as well as the rate of interest that is applicable to each loan account shall be assessed on the case-to-case basis, according to multiple factors like repayment capacity and borrower profile, kind of asset that is being financed, past repayment track record if any, other financial commitments of the borrower, loan’s tenure, security of loan as represented by underlying assets, payment’s mode, loan-to value ratio, the asset’s end-use, geography/location of borrower etc.
The rate of interest shall be annualised rate so that the borrower is aware of the exact rates that would be charged to the account.
Lending against collateral of Gold Jewellery
Presently the Company is not engaged in the business of the lending against gold jewellery, hence code associated to this business shall be approved as well as adopted as and when the decision is taken for entering the mentioned kind of business.
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.