Fair Practice Policy

The Fair Practices Code (FPC) is as per the RBI Master Circular no DNBR (PD) C.No.054/03.10.119/2015-16 dated July 01, 2015 on Fair Practice Code for NBFC's. The same FPC has been approved by KPB Fincare Private Ltd. ("The Company") Board of Director's on 31st August 2017.

Objectives of the Policy

  1. Develop a comprehensive Fair Practices Code to adopt guidelines provided by the regulator, self- regulatory organizations and global standards of client protection principles.

  2. Formulate operating guidelines for implementation of Fair Practices Code in an effective manner.

  3. Disseminate the policy guidelines in an effective manner to all stake holders in general and to customers & employees of KPB Fincare Private Ltd. in particular.

  4. Review & reinforcement mechanism to ensure high level of adherence to Fair Practices Code.

  5. Mechanism for constantly receiving feedback/grievances from customers in order to improve the implementation of Fair Practices Code.

  • Application for loans and their processing

    1. All communications to the borrower shall be in the vernacular language or a language as understood by the borrower

    2. All Loan Application Forms include the necessary information which affects the interest of the borrowers, so that the borrower can make a meaningful comparison with the terms and conditions offered by other MFIs and it will help them to take proper decision.

    3. The required documents to be submitted are listed clearly in the Loan Application Form.

    4. An acknowledgement for receipt of all loan application documents will be provided to all applicants along with the time frame within which the Loan applications will be disposed.

  • Loan appraisal and terms/conditions

    1. Field staff shall explain all the features, benefits, terms/conditions and pricing of the services including all fees, charges and interest rate on an annual declining basis, during Group Training (GT) and loan appraisal process.

    2. The Company shall provide to the borrower in the vernacular language Loan Card and Loan Agreement, containing the amount of loan sanctioned along with the terms and conditions including repayment schedule showing annualised rate of interest and method of application thereof will also be provided to the borrower.

    3. Acceptance of terms and conditions by the borrowers shall be kept on record.

    4. Company does not apply penal interest rate for late repayment and loan pre closure. Normal interest for the late payment will be applicable.

    5. No Security Deposit/Margin is collected from borrowers for availing loans.

    6. Our Loans are repayable on weekly, fortnightly or monthly basis, based on the choice of the borrower.

    7. Company shall have, not less than 85% of its assets, in the nature of qualifying assets which satisfy the following criteria:

      1. Only women borrowers are eligible.

      2. The borrower must not be a member of more than one JLG/SHG.

      3. The loan shall be utilized by the borrower for the purpose it was availed.

      4. The Household annual income of the borrower should not exceed Rs.1,00,000/- in rural area and Rs. 1,60,000/- in non-rural area.

      5. Loan amount does not exceed Rs. 60,000 in the first cycle and Rs. 1,00,000 in subsequent cycles.

      6. Total indebtedness of the borrower does not exceed Rs.1,00,000 provided that loan, if any availed towards meeting education and medical expenses shall be excluded while arriving at the total indebtedness of a borrower.

      7. Tenure of the loan should not to be less than 24 months for loan amount in excess of Rs. 30,000 with prepayment without penalty.

      8. Loan would be extended without collateral.

      9. Aggregate amount of loans, given for income generation, is not less than 50 per cent of the total loans given by the Company.

      10. Caps on Margin, Interest Rates and Pricing are complied as per RBI regulations.

  • Disbursement of loans including changes in terms and conditions

    1. The Company shall give notice to the borrower in the vernacular language as understood by the borrower for any change in the terms and conditions including repayment schedule, interest rates, service charges, prepayment charges etc.

    2. The company shall ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard will be incorporated in the loan agreement.

    3. The decision to recall / accelerate payment or performance under the agreement should be in consonance with the loan agreement.

    4. All sanctioning and disbursement of loans will be done at a central location and more than one individual will be involved in these functions. In addition, there shall be close supervision of the disbursement of loans.

  • Responsibility of Board of Directors

    1. The Board of Directors of Company shall lay down the appropriate grievance redressal mechanism within the organization. Such a mechanism would ensure that all disputes arising out of the decisions of lending institutions' functionaries are heard and disposed of at least at the next higher level. The Board of Directors would also provide for periodical review of the compliance of the Fair Practices Code (Adopted from sector associations, MFIN and Sa-dhan) and the functioning of the grievances redressal mechanism at various levels of management. A consolidated report of such reviews may be submitted to the Board at regular intervals, as may be prescribed by it.

  • Regulation of Interest

    1. The Board of the Company shall adopt an interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances. The rate of interest and the approach for gradations of risk and rationale for charging different rate of interest to different categories of borrowers shall be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter.

    2. 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 would be updated whenever there is a change in the rates of interest.

    3. The effective rate of interest charged on each loan product, fees and other charges would be prominently displayed in all branches, regional & head office and in the literature issued (in vernacular language) and on website.

    4. The rate of interest would be annualized rate so that the borrower is aware of the exact rates that would be charged to the account.

  • General

    1. The Company shall refrain from interference in the affairs of the members for the purposes provided in the terms and conditions of the loan agreement (unless new information, not earlier disclosed by the member, has come to the notice of the Company)

    2. The FPC in vernacular language shall be displayed by an NBFC-MFI in its office and branch premises

    3. A statement shall be made in vernacular language and displayed in their premises and in loan cards articulating their commitment to transparency and fair lending practices,

    4. Field staff shall be trained to make necessary enquiries with regard to existing debt of the borrowers.

    5. Training if any for availing loan from the company, 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.

    6. A declaration that the Company 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.

    7. The KYC Guidelines of RBI shall be complied with. Due diligence shall be carried out to ensure the repayment capacity of the borrowers.

  • Disclosures in Loan Agreement / Loan card

    1. The Company shall have a Board approved, standard form of loan agreement. The loan agreement shall preferably be in vernacular language.

    2. In the loan agreement 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 charges 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 period 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).

      7. An assurance that the privacy of borrower data will be respected.

    3. The loan card would reflect the following details (As guided by the NBFC-MFIs(Reserve Bank) Directions, 2011)

      1. The effective rate of interest charged.

      2. All other terms and conditions attached to the loan.

      3. Information which adequately identifies the borrower and acknowledgements by the Company of all repayments including instalments received and the final discharge.

      4. The loan card should prominently mention the grievance redressal system set up by the Company and also the name and contact number of the nodal officer.

      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. There shall be a moratorium period between the grant of the loan and the due date of the repayment of the first installment(as guided by the NBFCMFIs(Reserve Bank) Directions, 2011). This shall not be less than the frequency of the loan repayment.

      7. An assurance that the privacy of the borrower data will be respected.

      8. All entries in the Loan Card should be in the vernacular language.

  • Non-Coercive Methods of Recovery

    • Recovery shall normally be made only at the Center Meetings and Branches. 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 Center Meeting or branch for repayments on two or more successive occasions.

      The following precautions shall be followed

      1. The Company shall 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 Code shall lay down minimum qualifications necessary for the field staff and shall have necessary training tools identified for them to deal with the customers. Training to field staff shall include programs to inculcate appropriate behaviour towards borrowers without adopting any abusive or coercive debt collection / recovery practices.

      3. Compensation methods for staff should have more emphasis on areas of service and borrower satisfaction than merely the number of loans mobilized and the rate of recovery. Penalties may also be imposed in cases of non-compliance by field staff with the Code of conduct.

      4. Generally, only employees and not out sourced recovery agents would be used for recovery in sensitive areas. Our employees shall maintain decency and would not resort to undue harassment viz; persistently bothering the borrowers at odd hours, use muscle power for recovery of loans etc. Our employees shall not call on the borrowers before 6 AM and after 8 PM. They shall not visit the borrower’s residence or work place on days of festival, marriage etc. or any mourning occasions for the purpose of loan recovery.

  • Internal control system

    • As the primary responsibility for compliance with the FPC rests with the Company, they shall 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.

  • Grievance Redressal Officer

    • KPB Fincare Pvt. Ltd. is committed to following fair practices in all its business transactions and dealings with customers, employees and stakeholders with utmost transparency and ethical standards. In case of any complaints/ grievances/ disputes/ queries, the customers can make use of the following Grievance Redressal Mechanism set up by the Company, within the organization as per the escalation matrix mentioned below:

      1. LEVEL 1
        If in case of grievances, the customer can approach the Branch Manager (For branch level issues) or Admin Manager (For other than branch level issues) and discuss the grievance/ complaint/ issue. The concerned Manager shall resolve the issue within 7 working days.

      2. LEVEL 2
        If customer is not satisfied with the response received at the or did not receive a response, customer can contact the Toll-Free number 18008335665. Customer would be required to provide all the relevant details of the grievance, including contact details of the customer. The customer shall receive response within 5 working days of receipt the complaint.

      3. LEVEL 3
        In case, the issue is not resolved within 5 working days of complaint at Level 2, customers can write a letter or contact: Mr. Krishna Chandran, Grievance Redressal Officer, KPB Fincare Pvt. Ltd., Floor 2, AK Towers, Kalamassery, Kochi- 682033. Ph.: +91 484 2106711 Email: care@kpbfincare.in Customers shall receive a response within 10 working days from the date of receipt of complaint.

      4. LEVEL 4
        If customer is not satisfied with the response received from Grievance Redressal Officer or do not receive any response within 10 working days, customer can contact the Self Regulatory Organization of Microfinance Industry: Microfinance Institutions Network (MFIN) in writing or make a phone call to the toll free number of 18002700317. OR Customer may call or write to the following Officer of Reserve Bank of India General Manager, Department of Non-Banking Supervision, Reserve Bank of India, Fort Glacis, Rajaji Salai, Chennai 600001. Ph.: 044-25393406 Fax: 044-25393797 E-mail: dnbschennai@rbi.org.in

  • Clarification regarding repossession of vehicles financed by NBFCs

    • The company shall built in re-possession clause in the contract/loan agreement with the borrower which must be legally enforceable. To ensure transparency, the terms and conditions of the contract/loan agreement should also contain 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. A copy of such terms and conditions must be made available to the borrower in terms of circular wherein it was stated that the company may invariably furnish a copy of the loan agreement 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, which may form a key component of such contracts/loan agreements.

  • Lending against collateral of gold jewellery

    • While lending to individuals against gold jewellery, the company shall adopt the following in addition to the general guidelines as above.

      1. The company 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, loan,

        3. Internal systems to satisfy ownership of the gold jewellery,

        4. 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. Normally, such loans should not be extended by branches that do not have appropriate facility for storage of the jewellery,

        5. The jewellery accepted as collateral should be appropriately insured,

        6. Transparent auction procedure in case of non-repayment with adequate prior notice to the borrower. There should be 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 should be announced to the public by issue of advertisements in at least two newspapers, one in vernacular language and another in national daily newspaper, companies and related entities,

        8. As a policy, the NBFCs themselves should 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.

      2. The loan agreement shall also disclose details regarding auction procedure.