Fair practice code

Fair practice code

    • PREAMBLE:
      PANDINADU FINANCE COMPANY PRIVATE LIMITED (PFC) is a company incorporated under the Indian Companies Act, 1956, with the main objective of establishing and running a Non-Banking Financial Company to cater to the needs of the Small and Medium Entrepreneurs, farmers, traders and individuals who are in need of funds for their business and vocation.

INTERPRETATION:
Unless and otherwise stated in these presents, the terms wherever stated in this Code shall have the general meaning and be interpreted accordingly.

  • “Act” means the Companies Act, 1956, and the amendments to the Act made from time to time.
  • “Applicant” means the person/s who applied for the loan from the company.
  • “Article” means the Articles of Association of the Company and includes its amendments from time to time.
  • “Board of Directors” means the Board of Directors of Pandinadu Finance Company Private Limited.
  • “Borrower” means the person/s to whom the loan/s has/have been disbursed and includes his guarantors, co-obligants, legal heirs, legal representatives, transferees, assignees, and power of attorney holders.
  • “Chairman” means the Chairman of the company who is holding the office at the relevant point of time.
  • “Company” means “Pandinadu Finance Company Private Limited”.
  • “Code” means the Fair Practices Code as adopted by the Company and approved by the Reserve Bank of India, with modifications, additions, deletions and changes made from time to time to comply with the guidelines.
  • “Director” includes the Managing Director of Pandinadu Finance Company Private Limited.
  • “Notice” means the notice issued by or on behalf of the company on any person either for recovery of loan or for any other matter relating to the company’s affairs and includes the notice served personally, or through ordinary post, by registered post, by Speed Post, by courier services, or by e-mail or by any other recognized mode of communication and construed to be served on the other party within 72 hours of the dispatch.
  • “Vernacular language” means Tamil in the State of Tamil Nadu and the language which is spoken by the local people in the place outside Tamil Nadu where the office of the company is to be established/situated.

In this manual of Code, masculine gender includes feminine gender and neutral gender. Singular words include plural forms.

FAIR PRACTICES CODE:
Pandinadu Finance Company Private Limited, in order to comply with the requirements of the Reserve Bank of India and to establish a bench mark for NBFC sector, have prepared a Code of Fair Practices to be followed in its business and in its day to day activities:

The details of the Fair practices have been discussed in the Board Meeting and the advice of experts is taken and the present code has been formulated.

The fair practices code has been codified into three parts for easy reference and for operational convenience.

  • First Part speaks of the loan application and the facility for the borrower to approach the company for his requirement. (Pre sanction formalities)
  • Second Part speaks of the process to be adopted by the company in processing the application of the borrower and documentation. (Sanctioning formalities)
  • Third Part consists of the general practice of the company in its day to day affairs and the industrial practice. (Post sanction formalities and others)

PART I – APPLICATION STAGE AND PRE SANCTION FORMALITIES:

The major business of the company is the grant of loan to the needy borrowers. The first step towards the grant of loan is the issue and receipt of application form from the prospective borrowers.

M/s Pandinadu Finance Company Pvt Ltd will grant loans and advances by adhering to the following practices:

APPLICATION FORMS:

  1. Application form:
    All the Loan Applications, Loan Documents and other Communications to the borrower will be in English or in vernacular language as understood by the Borrower when the operations of the company are extended to other places/states.
  2. Filled up application forms and gathering of information about the borrower:
    The application form will be in such a form to gather information from the prospective borrowers, the necessary information in connection with the sanction of the loan and will cause a correction memo for resubmission of the application with necessary details and enclosures so that the process of loan screening will be carried with utmost care and without delay.
  3. Contents of the application and protection of the privacy policy:
    The company’s loan application forms will also 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 details provided by the borrowers will be protected and will not be divulged to anybody unless requested by the borrower given in writing.
  4. Adoption of KYC norms:
    The company will adopt the policy to collect necessary information with regard to the borrowers as per the directions of the Reserve Bank of India which are in force from time to time to adhere to the policies enunciated by RBI in various notifications and circulars.
  5. Acknowledgement for receipt of application:
    In order to facilitate and prioritize the processing of loan, our company, Pandinadu Finance Company Pvt Ltd will devise a system of giving acknowledgement for receipt of all loan applications. Preferably, the time frame within which loan applications will be disposed of will be indicated in the acknowledgement.

PART II – SANCTION OF LOAN:

  1. Loan agreement and documentation:
    M/s Pandinadu Finance Company Pvt Ltd will prepare loan agreement in English or in a vernacular language as understood by the Borrower along with a copy of each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.In order to ensure the loans are sanctioned properly and secured to the company, and to protect the interest of the company, the company will ensure that the property to be received by way of security is subject to scrutiny of the title to the borrower by a way of legal opinion from competent advocate and valued by an engineer as suggested from a panel of advocates and valuers and all formalities in relation to the securtization is carried out properly before the disbursement of the loan.
  2. Intimation of sanction of loan:
    The Pandinadu Finance Company Pvt Ltd will convey in writing to the borrower in Tamil and in English as understood by the Borrower, 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. A copy of the loan agreement will be furnished to the borrower so that the transaction with the company will be transparent and self explanatory.
  3. Changes in terms and conditions and intimation thereof:
    The Pandinadu Finance Company Pvt Ltd will give intimation in Tamil and in English as understood by the Borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, and prepayment charges etc.,Pandinadu Finance Company Pvt Ltd will ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard would be incorporated in the loan agreement.

PART III – POST SANCTION:

M/s PANDINADU FINANCE COMPANY PVT LTD will monitor & supervise the loans & advance sanctioned / disbursed by adhering to the following practices.

DISBURSEMENT OF LOAN AND POST SANCTION FORMALITIES:
Our company will ensure the disbursement of the loan as per the terms and conditions as mutually agreed between the company and the borrower.

  1. In the post disbursement period, supervision by Pandinadu Finance Company Pvt Ltd., will be constructive and the genuine difficulties which the borrower may face, will be given due consideration on individual request and on case by case basis.

FORECLOSURE/RECALLING THE LOAN/ADVANCE:

  1. Pandinadu Finance Company Pvt Ltd before taking a decision to recalling any loans & advances / accelerate payment or performance under the agreement or seeking additional securities, will give notice in writing in Tamil or in English or a language as understood by the Borrower in consonance with the loan agreement.

RELEASE OF SECURITIES ON REPAYMENT OF THE LOAN:

  1. Pandinadu Finance Company Pvt Ltd will 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 Pandinadu Finance Company Pvt Ltd 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 particular about the remaining claims and the conditions under which Pandinadu Finance Company private Ltd are entitled to retain the securities till the relevant claim is settled / paid.
  2. Pandinadu Finance Company Pvt Ltd will refrain from interference in the affairs of the borrower except for the purposes provided in the terms and conditions of sanction of the loan (unless new information, not earlier disclosed by the borrower, has come to the notice of the lender).

TRANSFER OR TAKE OVER OF THE LOAN ACCOUNT:

  1. In case of receipt of request for transfer of borrowal account, either from the borrower or from a lender which proposes to take over the account, the consent or otherwise i.e. objection of the Pandinadu Finance Company Pvt Ltd, if any, will be conveyed in writing within 21 days from the date of receipt of request. Such transfer shall be as per transparent contractual terms in consonance with law.

RECOVERY/COLLECTION OF LOAN:

  1. In the matter of recovery of loans, the Pandinadu Finance Company Pvt Ltd will not resort to any sort of harassment viz. persistently bothering the borrowers at odd hours or use of muscle power for recovery of loans etc.

TRAINING TO STAFF:

  1. The company will provide necessary training to the office staff as well the field staff regarding the schemes available with the company, the policy of the company, loan facilities offered by the company, their terms and conditions before and after the disbursement of the loan.
  2. The company and its staff will act courteously with the customers and borrowers in regard to the collection of the loan. The customers/borrowers will be reminded of the loan, its due date both personally and by intimation in writing about the outstanding dues on the loan, the payment date, the penal charges, if any chargeable, on the loan well in advance. The intimation will be served at least 15 days before the due date of payment at the usual address which is provided to the company and the communication will be sent through all possible means of communications, telephone reminders, letter of reminder through postal system, the courier service, the registered post with acknowledgement due, and e-mail reminders.

CUSTOMER CARE CENTRE

Establishment of Customer Care Centre (CCC)
The company recognizes the importance of the customer care relationship. A Customer Care Centre will be set up in the Corporate office of the company to deal with the grievances, complaints or suggestions received from the customers or borrowers or from general public and a suitable grievance redressal mechanism will be devised in such way that the grievances are redressed and disposed of within a week’s time or depending upon the nature of complaints received and to be heard and disposed of.

Functioning of the Centre:
The customer care center will be manned by trained staff to address the needs and requests of the customers and any complaint of serious nature including the complaints against the non-performance and the conduct of the staff at all levels will be dealt with by the immediate superior official and will be solved accordingly.

GRIEVANCE REDRESSAL MECHANISM
The Board of Directors of Pandinadu Finance Company Pvt Ltd will lay down the appropriate grievance redressal mechanism within the organization to resolve disputes arising in this regard. Such a mechanism will ensure that all disputes arising out of the decision of lending institutions’ functionaries are heard and disposed of by the authorized person at the next higher level. The Board of Directors will also provide for periodical review of the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of management. A consolidated report of such reviews will be submitted to the Board at regular intervals as may be prescribed by it.

Appointment of Grievance Redressal Officer/Nodal Officer:

Four Tier Grievance Redressal Mechanism:
The Company will have a four tier system of redressal mechanism in operation.

First Tier of grievance redressal:
The First tier of the grievance redressal mechanism will be looked after by the Branch Manager/the Chief Official to look after the complaints received with regard to the operation of the accounts, the disbursement of the loan, the interest charged, the payments on due dates, complaints against the field staff or the staff at the office. He will be designated as the Grievance Redressal Officer at the Branch and the notice in this regard will be displayed at a prominent place in the office and the attention of the customers will be invited about the notice displayed, the contents of such display, etc. Any such complaints will be sorted out or appropriate remedial action will be taken within seven (7) days of the receipt of the complaints received by him. The Branch Manager/the Chief Officer shall address the grievance and set the right the same, if need be and communicate to the customer concerned in writing within seven days.

In case of failure by the concerned official or by the Branch Manager, the customers can take up the same to the second tier of grievance redressal mechanism that resides with the Deputy General Manager (DGM) of the company.

Second Tier of Grievance Redressal:
The Second Tier of the grievance redressal mechanism will be looked after by the office of the DGM of Pandinadu Finance Company Private Limited. The DGM of the company will be in charge of the second tier of the grievance redressal and he is authorized to look at all complaints received from the customers or from the public or from the Government.

Third Tier of Grievance Redressal:
The Second Tier of the grievance redressal mechanism will be looked after by the office of the Managing Director of Pandinadu Finance Company Private Limited. The Office of the Managing Director shall call for necessary records, evidences and other particulars from the branch/official concerned and will address the grievance and solve the same amicably to the satisfaction of the complainant. Such complaints will be disposed of within 30 (thirty) days of the receipt of complaint and in case of extensions of time given for the reply or any clarification to be received from the customers, within 15 days of such clarification being received.

The complainant will be provided with fair opportunity of representing his point personally to the Managing Director and through writing.

The Managing Director as the Nodal Officer for redressal grievance may call for such records, evidences and details and will decide accordingly on the basis of the merits of each case and communicate the same to the complainant within the time frame mentioned above.

Fourth Tier of Grievance Redressal:
The Fourth Tier of the grievance redressal mechanism will be the submission of the complaint to the Grievance Redressal Officer at the Regional Office of the Reserve Bank of India. The complainants/ the customers who are not satisfied with the redressal offered by the company or the complaint is not properly addressed or there is no response by the company, the complainant has got right to take up the appeal to the Reserve Bank of India and write to the Regional Office of the Reserve Bank of India along with the copy of the complaint, the reply given by the company and other evidences to support his case.

Complaint against the non-response to the Grievance application to the Regional Office of the Reserve Bank of India:
The complainant who is not satisfied with the redressal of grievance offered by the company may appeal to the Controlling office of the Reserve Bank of India.

DISPLAY OF THE FAIR PRACTICES CODE

Notice to be displayed in the branch in a prominent place:
Fair Practices Code will be displayed in English (or in the vernacular language as understood by the borrower) in a prominent place to be noticed by the customer easily, based on the guidelines outlined hereinabove will be put by Pandinadu Finance Company Pvt Ltd with the approval of the Board within one month from the date of approval by the Reserve Bank of India.

Display in company’s web site:
The Fair practices code shall be made available in the company’s web-site, for the information of various stakeholders.

LENDING NORMS AND LIMITS

Limit for lending/advances:

  1. The Pandinadu Finance Company Pvt Ltd will not lend or advance money to any single group not exceeding 15% of net owned funds.

Conforming to the rules and regulations:

  1. The Pandinadu Finance Company Pvt Ltd will carry out proper mechanism for sanctioning of loans & advances and will not take any decision affecting the interest of the company or against the rules & regulation applicable to non banking finance company.

Follow up of the guidelines issued by the Reserve Bank of India:

  1. The Pandinadu Finance Company Pvt Ltd will sanction the loans and advances within the norms and guidelines prescribed by RBI from time to time.

Communication and creation of awareness:

  1. The Pandinadu Finance Company Pvt Ltd will publish the rate of interest in the company’s website. The Pandinadu Finance Company Ltd will also communicate in writing the rate of interest and the approach for gradations of risk and rationale for charging different rate of interest to different categories of borrowers, to the borrower or customer in the application form and communicated explicitly in the sanction letter.
  2. The rate of interest charged by Pandinadu Finance Company Pvt Ltd shall be an annualized rate so that the borrower is aware of the exact rates that would be charged to the account.

ADMINISTRATION AND IN HOUSE MANAGEMENT

ADOPTION OF FAIR PRACTICES CODE

  1. M/s. Pandinadu Finance Company Pvt Ltd shall adopt the following guidelines for lending business and regulatory frame work.
    DISPLAY OF NOTICE:
    1. The Fair Practices Code will be displayed by Pandinadu Finance Company Pvt Ltd. at its Corporate Office and in branch premises.
    2. A statement will be made in Tamil as well as in English and displayed by Pandinadu Finance Company Pvt Ltd’s offices and in loan cards articulating the commitment to transparency and fair lending practices.
    3. The effective rate of interest charged and the grievance redressal system set up by Pandinadu Finance Company Pvt Ltd will be prominently displayed in all our offices and in the literature issued by it (in Tamil, English and in vernacular language) and on our website.
  2. LOAN AGREEMENT/LOAN CARD:
    M/s. Pandinadu Finance Company Pvt Ltd will provide the following practices for disclosure in loan agreement / loan card
    1. M/s. Pandinadu Finance Company Pvt Ltd shall have a Board approved, standard form of loan agreement. The loan agreement will be in Tamil, English and in a vernacular language.
    2. In the loan agreement of Pandinadu Finance Company Pvt Ltd the following shall be disclosed.
      1. All the terms and conditions of the loan
      2. 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 charge in respect thereof),
      3. That there will be no penalty charged on delayed payment,
      4. That no Security Deposit/Margin is being collected from the borrower,
      5. That the borrower cannot be a member of more than one SHG /JLG.
      6. The moratorium between the grant of the loan and the due date of the repayment of the first installment (as guided by Reserve Bank Directions, 2011).
      7. An assurance that the privacy of borrower date will be respected.

    CONTENTS OF THE LOAN CARD:

    1. The loan card issued by Pandinadu Finance Company Pvt Ltd will reflect the following details as specified in the Non Banking Financial Company (Reserve Bank) Directions.
      1. The effective rate of interest charged
      2. All other terms and conditions attached to the loan
      3. Information which adequately identifies the borrower
      4. Acknowledgements by Pandinadu Finance Company Pvt Ltd of all repayments including installments received and the final discharge.
      5. Non-credit products issued shall be with full consent of the borrowers and fee structure shall be communicated in the loan card itself.
      6. All entries in the Loan Card will be in Tamil/English or in the vernacular language.
  3. POLICY ON CODE OF CONDUCT TO THE STAFF:
    1. M/s. Pandinadu Finance Company Pvt Ltd will ensure that a Board approved policy is in place with regard to code of conduct by field staff and systems for their recruitment, training and supervision.
    2. The Board will lay down minimum qualifications necessary for the field staff and will have necessary training tools identification form to deal with the customers.
    3. Training to field staff will include programs behavior towards borrowers without adopting any abusive or coercive debt collection/recovery practices.
    4. Compensation methods for staff will have more emphasis on areas of service and borrower satisfaction than merely the number of loans mobilized and the rate of recovery. Necessary disciplinary action may be imposed in cases of non-compliance of field staff with the code of conduct. Generally employees and not out sourced recovery agents will be used for recovery of the loans.
    5. M/s. Pandinadu Finance Company Pvt Ltd will make necessary organizational arrangements to assign responsibility for compliance to designated individuals within the company and establish systems of internal control including audit and periodic inspection to ensure the same.
  4. LENDING AGAINST GOLD/JEWELLERY:
    While lending to individuals against gold jewellery, Pandinadu Finance Company Pvt Ltd shall adopt the following in addition to the general guidelines as above.They shall put in place Board approved policy for lending against gold that should inter alia, cover the following:
    1. Adequate steps to ensure that the KYC guidelines stipulated by RBI are complied with and to ensure that adequate due diligence is carried out on the customer before extending any loan,
    2. Proper assaying procedure for the jewellery received.
    3. Internal systems to satisfy ownership of the gold jewellery.
    4. The policy shall also cover putting in place adequate systems for storing the jewellery in safe custody, reviewing the systems on an on-going basis, training the concerned staff and periodic inspection by internal auditors to ensure that the procedures are strictly adhered to. As a policy, loans against the collateral of gold should not be extended by branches that do not have appropriate facility of storage of the jewellery,
    5. The jewellery accepted as collateral should be appropriately insured,
    6. The Board approved policy with regard to auction of jewellery in case of non-repayment will be transparent and adequate prior notice to the borrower should be given before the auction date. The company will lay down the auction procedure that would be followed. The company will ensure that there is no conflict of interest and the auction process must ensure that there is arm’s length relationship in all transactions during the auction including with group companies and related entities,
    7. The auction will be announced to the public by issue of advertisements in at least any two newspapers, one in Tamil and another in English daily newspaper.
    8. As a policy the Pandinadu Finance Company Pvt Ltd themselves shall not participate in the auctions held,
    9. Gold pledged will be auctioned only through auctioneers approved by the Board.
    10. The policy shall also cover systems and procedures to be put in place for dealing with fraud including separation of duties of mobilization, execution and approval.
    11. The loan agreement will also disclose details regarding auction procedure in vernacular language or a language as understood by the borrower.