Fair Practices Code

Introduction

The Reserve Bank of India (RBI) had issued various guidelines on Fair Practices Code for Non- Banking Financial Companies (NBFCs) thereby setting standards for fair business and corporate practices while dealing with their customers. The Fair Practice Code (FPC) has been formulated by Paul Merchants Finance Private Limited (the Company) in compliance with the guidelines issued by Reserve Bank of India vide circular DNBS.CC.PD.No.266 / 03.10.01 / 2011-12 dated 26 March 2012 titled “Guidelines on Fair Practices Code for NBFCs”, Circular No. DNBR (PD) CC.No.054/03.10.119/2015-16 dated July 1, 2015 and Master Direction DNBR.PD.007/03.10.119/2016-17 dated September 01, 2016 (as amended from time to time)

The FPC will be applicable to all the offices of the Company including the Head/Registered Office, Chandigarh, the Regional Offices located in various centres and the Branches located across India. The FPC shall be binding on all the employees and officers of the Company.

Objectives

The objectives of the FPC are as under.

1. To act fairly and reasonably in all the dealings with borrower and adopt the best practices in dealings with customers.
2. Follow fair, transparent, and ethical practices while conducting business.
3. Provide all necessary information and inputs to customers and promote a mutually beneficial long term relationship.
4. Promote fair and transparent practices by setting minimum standards in customer dealing.
5. Provide to the customers effective overview of practices followed by the Company in respect of financial facilities and services.

The Fair Practices Code adopted by the company covers the following areas.

1. Loan applications and processing thereof.
2. Loan appraisal and terms/conditions.
3. Disbursement of loans, including changes in terms and conditions.
4. Disclosures about interest rates and approach for gradation of risk, foreclosure charges /pre-payment penalties.
5. Policy on KYC, Appraisal, insurance, storage of securities, Auction etc.
6. Grievance redressal mechanism

1. Applications for Loans and their Processing

1. All communications to the borrower shall be in vernacular language or in a language as understood by the borrower as indicated by him/her in the loan application.
2. Loan application forms shall, inter alia, include the broad features and the terms and conditions governing the loan. This would enable the borrowers to take an informed decision by comparing and analyzing the terms offered by the Company with other lenders in the market. The said Form shall also specify the documents required to be submitted by the borrowers.
3. If any additional documents/information is/are required from the borrower, the same shall be communicated to the borrower immediately.
4. The borrower shall be given an acknowledgement duly signed by the Authorized Signatory of the Company as receipt of his loan applications.

2. Loan appraisal and terms and conditions

1. The Company shall convey in writing to the borrower in the vernacular language or in a 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 annualised rate of interest and method of application thereof and keep the acceptance of these terms and conditions by the borrower on its record.
2. The Loan Agreement alongwith all enclosures quoted in Loan Agreement will be prepared in duplicate, one copy each will be retained by the Lender and the borrower. The Loan agreement will be executed in a vernacular language or a language as understood by the borrower as indicated by him in the loan application.
3. The high /penal interest that will be charged for late payment shall be mentioned in bold the loan document.
4. An acknowledged copy of the loan document shall be kept as part of the document

3. Disbursements of loans including changes in terms and conditions

1. The loan shall be disbursed on executing the necessary documents and completion of the formalities regarding creating a charge over the security offered by the borrower.
2. Any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc. shall be informed to the borrower in the vernacular or a language as understood by the borrower.
3. Any changes in interest rates and charges shall be only prospective. A suitable condition in this regard shall be incorporated in the loan document obtained from the borrower.
4. Decision to recall/accelerate payment or performance shall be as per the covenants in the loan document.
5. The Company shall 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 the Company 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 the Company is entitled to retain the securities till the relevant claim is settled / paid.
6. The Loan agreement shall also disclose details regarding auction procedure.
7. financing against the collateral of gold must insist on a copy of the PAN Card of the borrower for all transactions above Rs. 5 lakhs.

4. Rate of interest

1. 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.
2. The Company shall frame appropriate internal policies and procedures for determining the interest rates and processing and other charges. The Company shall, at the time of disbursal, ensure that the interest rate and other charges, if any, on loan and advances are in strict adherence to above referred internal policies and procedures.
3. The rate of interest will be annualized rates so that the borrower is aware of the exact rates that would be charged on the loan.
4. The information published in the website shall be updated whenever there is change in the rates.
5. The rate of interest and the approach for gradation of risk and rationale for charging different rates of interest to different schemes shall be disclosed in the application form and also communicated explicitly in the sanction letter issued to the borrower.
6. The rates of interest and the approach for gradation of risk shall also be made available on the website.
7. Interest rate slab changes meant to encourage timely interest payment, levying of additional interest for discouraging loans from crossing the sanctioned period etc, shall be mentioned clearly in the loan agreement.
8. 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, with or without co-obligant(s).

5. Policy on KYC, Appraisal, Insurance, Storage of Securities, Auction etc.

The Company shall put in place a policy duly approved by the Board covering the following aspects:

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 appraisal procedure for assessing the value and purity of the jewellery accepted as collateral security.
3. Internal systems to satisfy ownership of the gold jewellery
4. adequate systems for storing the jewellery in safe custody, which will be reviewed on regular basis. Training to the concerned staff will be imparted and periodic inspection by internal auditors will be done to ensure that the procedures are strictly adhered to. As a policy, loans against the collateral of gold shall not be extended by branches that do not have appropriate facility for storage of the jewellery.
5. the jewellery accepted as collateral shall be appropriately insured and a declaration shall be obtained from the borrower confirming ownership of gold jewellery.
6. transparent auction procedure of jewellery in case of non-repayment with adequate prior notice to the borrower. It will be ensured that there is no conflict of interest and the auction process will be such that there is arm’s length relationship in all transactions during the auction including with group companies and related entities.
7. The auction shall be announced to the public by issue of advertisements in at least 2 newspapers, one in vernacular language and another in national daily newspaper.
8. As a Policy the Company shall not participate in the auctions held.
9. Gold pledged will be auctioned only through auctioneers approved by the Board of Directors.
10. The Internal policy and control shall be devised to include systems and procedures for dealing with fraud including separation of duties of mobilization, execution and approval.

6. Grievance redressal mechanism

Towards ensuring redressal of disputes arising out of decisions of the functionaries of the Company, the following mechanism is put in place:

1. The decisions of any official below the Branch Manager shall be heard and disposed of by the Branch Manager.
2. If the Branch Manager could not resolve the grievance, the borrower shall bring take up the matter with the Business Head whose address is displayed in the Branch premises.
3. If the Business Head also could not resolve the grievance to the satisfaction of borrower, the borrower may write to the Grievance Redressed Cell of the Company at the following address.
   Name & Designation of the Grievance Redressal Officer and Nodal Officer:
   Sh. Shaibu Geevarghese Cherian, Whole Time Director
   Address: The Grievance Redressal Cell,
   Paul Merchants Finance Private Limited, (formerly known as Paul Fincap Private Limited)
   SCO 829 - 830 Sector 22 - A, Chandigarh - 160022.
   Phone No: 0172-5292655
   E-mail: info@paulfincap.com
   
4. If the complaint is not resolved within a period of one month, the customer may appeal to the Officer-in charge of the Regional Office of Reserve Bank of India, whose details are given hereunder:
   Chief General Manager
   Department of Non-Banking Supervision Reserve Bank of India,
   Sector 17 Chandigarh
   Phone No: 0172-2721434
   E-mail: Rakeshtripathy@rbi.org.in
5. The Company will call delinquent customers between 09:30 hrs to 18:30 hrs unless special circumstances of the borrower’s business require to call them otherwise outside the hours mentioned.

General

1. The Company shall refrain from interference in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless information, not earlier disclosed by the borrower, has been noticed).
2. In case of receipt of request from the borrower for transfer of borrowal account, the consent or otherwise i.e. objection of the Company, if any, shall 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.
3. In the matter of recovery of loans, the Company shall not resort to undue harassment viz; persistently bothering the borrowers at odd hours, use muscle power for recovery of loans etc. The Company shall ensure that the staff are adequately trained to deal with the customers in an appropriate manner.

Language and mode of communicating fair practice code

Fair Practices Code (which shall preferably be in the vernacular language or a language as understood by the borrower) shall be put up on their web-site of the Company for the information of various stakeholders.

Review

The compliance of the Fair Practices Code as well as the functioning of the Customer Grievances Redressal Cell shall be reviewed by the Whole Time Director on a Quarterly basis and a consolidated report of such reviews shall be placed before the Board of Directors. The Board of Directors of the Company shall Review Fair Practices Code and Functioning of Grievances Redressal Mechanism Annually.

For PAUL MERCHANTS FINANCE PRIVATE LIMITED
(Formerly Known as Paul Fincap Private Limited)
Sd/- SHAIBU GEEVARGHESE CHERIAN (WHOLE TIME DIRECTOR)
DIN 07319125