The Reserve Bank Of India, vide its notification no RBI/2006 - 07/138 DNBS.(PD)/CC no. 80/03.10.042/2005 - 06 dated 28th September 2006 came out with guidelines for Fair Practices Code for Non - Banking Finance Companies (NBFC) . These guidelines were further reviewed and modified vide notifications RBI /2011 - 12/470 DNBS.PD/CC. No. 266/03.10.01/2011 - 2012 dated 26th March 2012 and R BI/2012 - 2013/416 DNBS.CC.PD.No. 320/03.10.01/2012 - 13 dated 18 th February 2013, under section 45L of Reserve Bank of India Act 1934.
According to these guidelines, the NBFC is required to design Fair Practices Code, get the same approved by Board of Directors and implement it. SME Corner, also referred to as 'the Company' hereafter, is an RBI registere d non - deposit taking NBFC, carrying on approved NBFC business and activities.
SME Corner has adopted this code, as approved by its Board of Directors. These codes are in conformity with the guidelines on Fair Practices Code issued by RBI vide the afore said circulars. SME Corner would have these as the minimum standards to be applied while dealing with the customers. The code enunciated here applies to all customers of SME Corner. The customers are encouraged to reach out to the contacts mentioned her ein, should they have any complaints or redressal issues on any of the items covered here in the code.
1. Objectives of the Code:
The key objectives of the Fair Practices Code are as below:
- To promote fair, reliable and trustworthy practices in dealing with the customers.
- To enable the necessary transparency to the customers so that they could have a good understanding of the product they require and also get a reasonable idea of the service standards they can expect from the Company.
- To ensure that the relationships between the Company and the customers always remain fair and cordial.
2. Applications for loans and their processing
- All communications with the customers would be in English. Where necessary and appropriate, the Company would enable vernac ular communication with the customer. The Company will make sure that the customer understands the loan terms and conditions and everything else necessary for him / her to know and shall use the appropriate language to communicate the same.
- In line with the latest thrust of the Government of India, the Company would offer Application Forms to the customers in digital form as well, in addition to the physical form. The Application Form would be designed such that it would include all the information that is required to submitted by the customer to the Company for processing. The information in the application form would also enable the customer to make a meaningful comparison of the terms and conditions with that of other NBFCs, who offer similar products and services. Eventually, the customer would be able to take an informed decision based on such comparison.
- The application form would contain all terms and conditions that are relevant to the loan, along with the documents that are required to be shared by the customer with the Company for processing the loan application. The Company though reserves the right t o call for additional documents and clarifications as it deems fit, depending on the credit requirements for the loan.
- SME Corner would provide an acknowledgement to the customer for receipt of his / her application for the loan. At the time of accepta nce of the application form, the Company would also indicate a time within which it would revert to the customer with a decision. SME Corner will ensure to revert back to the customer with its decision within a reasonable period of time, which would not no rmally cross 10 days from the date of application.
3. Loan Appraisal, Terms and Conditions
- SME Corner would inform the customer about the outcome of the loan application, through a written and / or email communication or any other acceptable mode of comm unication for record. If the loan application is approved, the communication to the customer would include the key terms and conditions including amount of loan sanctioned, processing fee applicable, rate of interest, late payment charges and all other r elated clauses. All terms and conditions would be covered in the loan agreement as well, which would be the contract between the customer and SME Corner.
- The customer's acceptance of these terms would be kept with SME Corner for its record and any loan amount to be disbursed would only happen after customer provides the acceptance of the terms.
- Penal charges and / or overdue interest for delayed payments of EMIs, would be mentioned in the contract executed between the customer and the Company.
- SME Corn er would provide a copy of the loan agreement to the customer.
4. Disbursement of Loan including changes in terms and conditions
- Any changes in disbursement terms and conditions of the loan would be informed to the borrower by way of appropriate written communication including email and / or any other acceptable mode. Any changes in interest rates if implemented, will only come into effect prospectively.
- If SME Corner is required to recall the loan or accelerate repayments of the loan, it would be done only in consonance with the terms as mentioned in the loan agreement.
5. Release of Security:
Any securities that SME Corner may hold for its customers, against the loans given, will be released to the customer upon full repayment of all dues by the customer and on realisation of outstanding amount of customer's availed limit. This is subject to a ny legitimate right or lien that SME Corner may have against the customer. If the Company wishes to exercise such right of set off, the Company would make sure to give adequate notice to the customer will full particulars, which would include any and all remaining claims and also the conditions under with SME Corner is entitled to exercise the right to set - off, till the relevant claim is settled or paid off by the customer. The Company would also ensure that once all terms are complied with and fulfilled b y the customer, a No Objection Certificate would be issued to the customer, within 15 working days of completion of formalities.
6. Rate of Interest
- The Company shall frame appropriate internal policies and procedures to d etermin e the interest rates to be charged to customer, processing and other charges as applicable. The Company shall, at the time of disbursal, ensure that the interest rate and other charges, if any, on loan are in strict adherence to above referred internal p olicies and procedur es.
- The rate of interest shall be annualized rates to make the borrower aware of the exact rates that would be charged to the account. The said rate would be disclosed to the borrower explicitly in a written contract with the borrower.
- The rate of intere st charged to the customer would depend upon the gradation of the risk of the borrower, which would take into account customer's financial strength, business, regulatory environment that is affecting the business, competition, past history of the borrower etc.
- SME Corner would never interfere in customer's affairs, except for the specific purposes that have been provided for in the terms and conditions of the signed loan agreement (unless there is some new information in relation to the customer, that has come to the notice of the Company and such information was not disclosed by the customer earlier).
- f the Company receives any request from the borrower for transfer of the borrowing account, the Company would give its revert, which coul d be a consent or any objection to transfer, within 21 days from the date of receipt of request for such transfer. The Company would also ensure that such transfer happens as per the transparent terms mention in the contract with the customer and in conson ance with the applicable laws.
- n the matter of recovery of outstanding dues of the customer, SME Corner would not resort to any undue harassment, viz. persistently bother the borrowers at odd hours, use of muscle power to recover the dues of the loan etc . Appropriate training would be given to the staff who deal with the customers for various requirements.
8. Grievance Redressal Mechanism:
A sound platform to provide an excellent customer service is critical in today's competitive environment. SME Cor ner has always aimed to provide the best to its customers. Towards making the Grievance Redressal Mechanism effective for the customer, the Company has put together a structure to ensure that customer complaints and grievances are addressed in a just and fair manner, within a given framework of rules and regulations.
For any grievance that the customer may want redressed, he / she can write at the following contact given:
409/410,Trade World,B Wing,
Kamala Mills Compound,
Senapati Bapat Marg,
If even after bringing it to the notice of the above office, the complaint is not resolved, the customer can escalate the complaint to Grievance Redressal Officer at the following coordinates:
409/410,Trade World,B Wing,
Kamala Mills Compound,
Senapati Bapat Marg,
If the complaint is not re solved within a month , the customer may appeal to Officer - in - Charge of the Regional Office of Department of Non - Banking Supervision (DNBS) of RBI under whose jurisdiction the Registered Office of the Company falls.
The details of DNBS is as given below
Dy. General Manager, Department of Non - Banking
Supervision Reserve Bank of India, Mumbai Regional Office
Near Maratha Mandir , Mumbai Central ,
Mumbai - 400008
Email ld: dnbsmumbai @rbi.org.in
Mandatory display requirements:
SME Corner would display the following in its branches:
- Appropriate arrangement for receiving complaints and suggestions.
- Display of the name, address and contact number of the Complaint Redressal Officer
The process of the complaints redressal unit will ensure closure of all complaints to the customers' satisfaction. They will ensure that the complaint is escalated to the appropriate levels as necessary.
SME Corner would acknowledge receipt of the complaints and would endeavour to see that all complaints are promptly attended to.
9. Board of Directors Review
This Fair Practices Code would be reviewed periodically by t he Board of Directors of SME Corner and any changes required would be incorporated into the policy taking into consideration the newer developments in the environment.