Master Circular – Fair Practices Code – RBI/2015-16/16 DNBR (PD) CC.No.054/03.10.119/2015-16 dated July 01, 2015

RBI has issued guidelines on Fair Practices Code (FPC) for all NBFCs to be adopted by them while doing lending business. The guidelines broadly cover general principles on adequate disclosures on the terms and conditions of a loan and also adopting a non-coercive recovery method.
Companies are required to adopt a Fair practice code approved by the Board of Directors prior to application to RBI for an NBFC license.

Applicability 

This policy comes into force on approval by the Board of Directors of cKers Finance. It will be
reviewed by the Board every 3 years, or earlier if amendments are necessitated by change in
regulations. cKers would primarily extend project and asset financing to energy service companies
and corporate borrowers. This policy would also be reviewed if the company expands its client
base to start lending to individual customers.

2 Objective of Policy

The policy outlines the company’s approach on the following:
a) Dealing with loan applications and maintaining transparency in dealings with customers
b) Loan documentation and post disbursement monitoring
c) Monitoring and Recovery practices
d) Confidentiality
e) Grievance redressal and supervision by the Board

3 Applications for loans and their processing

The Company’s prospective client base would include early-stage businesses as well as relatively small businesses. Its approach in dealing with their financing requirements would aim to be constructive in terms of helping them build up their optimal financing structures as well as select suitable financing options. The company would create products that are suitable to various sub-segments. Further, it will structure loan terms to better align to borrow cash flows while mitigating its risks.
a) All communications to the borrower shall be in English as it is understood by corporate borrowers.
b) Loan application forms should be detailed with appropriate checklists and may indicate the documents required to be submitted for processing the loan application. The borrower would be made aware of the loan product being offered. The borrower would be shared an indicative term sheet containing terms and conditions applicable to the loan prior to submission of the loan sanctioning by relevant authority. Where possible, the time frame within which loan applications will be decisioned should also be communicated to the borrower.
c) Loan sanction – The company would communicate loan sanction to the borrower by way of a sanction letter containing the amount of loan sanctioned along with the terms and conditions including annualised rate of interest, repayment period, and penal interest charged for late repayment. The company would keep the acceptance of these terms and conditions by the borrower on its record.

4 Loan documentation and post disbursement monitoring

a) Loan agreement – The company’s loan agreement and its enclosures would be executed and a copy given to the borrower prior to disbursement. Any amendments to the agreement, such as revisions in interest rate, prepayment charges, or service charges would be notified to the borrower prior to such revision.
b) Loan closure – Post repayment of all dues and claims, the company would release all securities pertaining to a loan. In case there are other loans or claims a general or specific right to set off, the company may retain appropriate securities while notifying the borrower about such loan set
off rights or claims.
c) Loan foreclosure by borrower – In case of receipt of request from the borrower for foreclosure/ refinance of loan, the consent or otherwise i.e. objection of the company should be conveyed within 21 days from the date of receipt of request. Such request shall not be unreasonably
withheld.

5 Recovery practices

a) Review and monitoring – the company may follow an operationally intensive review and monitoring process with respect to its borrowers, especially for those which are operating earlystage businesses. However, such rights/approach shall be communicated to borrower upfront
and the Company shall not seek to interfere in the affairs of the borrower unless information not disclosed by the borrower is noticed.
b) Loan Recovery follow up – In the matter of recovery of loans, the Company would not resort to undue harassment of customers. The Company would ensure that the staff are adequately trained to deal with the customers in an appropriate manner.
c) Loan recall/enforcement – The decision to recall / accelerate payment or seek performance under the agreement should be in consonance with the loan agreement.
d) Repossession of security (assets): The company’s right to repossess assets being financed or enforce security shall be built in in the contract/loan agreement with the borrower. Such terms shall include provision for a) notice, b) circumstances for waiver of notice, c) process for taking
possession (in case of mobile assets), d) sale/ auction of security.

6 Confidentiality
a) The company shall treat all personal information as private and confidential, unless authorized by the customer.
b) Unless authorized by the customer, the Company shall not reveal transaction details to any other entity (excluding its consultants or advisors), except in the following cases:

• if required by statute or regulation
• If it is in public interest to reveal this information
• If it is in the company’s interests to share this information (e.g. for fraud prevention) to
  Banks / Financial Institutions
• In any case, such reasons would not be sufficient grounds for sharing information to third
  parties for marketing purposes.

7 Grievance redressal and supervision by the Board

7.1 Grievance Redressal Officer
Jayant Prasad
Executive Director
708, Hemkunt Chambers,
89, Nehru Place
New Delhi 110019
011-41051195

In case the borrower is not satisfied with the decision of the Grievance Redressal Officer, he may approach the Officer in Charge of the Regional Office of Department of Non-Banking Supervision of RBI at the address given below:
General Manager,
Department of Non-Banking Supervision,
Reserve Bank of India,
6, Sansad Marg, New Delhi-110001

7.2 Responsibility of Board of Directors
The Board of Directors of the Company shall periodically review the compliance of the Fair Practices
Code and the functioning of the grievances redressal mechanism quarterly

8 Policy Administrator

The GRO shall be the Policy Administrator. The policy shall be put up on the Company’s web-site for the information of various stakeholders.