Fair Practice Code

ATD FINANCIAL SERVICES PRIVATE LIMITED
FAIR PRACTICE CODE
(Last Amended in the Board dated 27th September 2021)

INTRODUCTION

The Fair Practice Code (FPC) has been formulated by ATD Financial Services Private Limited (the Company) in response to guidelines issued by Reserve Bank of India vide circular DNBR.PD.007/03.10.119/2016-17 dated September 01, 2016 titled “Fair Practices Code for applicable NBFC” replacing the existing code posted on the Company’s website.
The FPC will be applicable to all the offices of the Company including the Head Office, C-316, B&C, Sector-10, Noida, U.P. 201301. The Branch Offices located in various centres 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. Adopt the best practices in dealings with customers.
2. Set challenging benchmarks and strives to achieve high operating standards for ensuring customer satisfaction.
3. Follow transparent, fair, ethical and legally tenable practices while conducting business.
4. Provide all necessary information and inputs to customers / prospective customers and promote a mutually beneficial long term relationship.
5. Facilitate a continuously growing base of satisfied customers while scrupulously avoiding acquisition of customers having doubtful credentials or criminal background.

FAIR PRACTICES CODE

Applications 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. Loan application forms shall 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 loan application form shall indicate the documents required to be submitted with the application form.
3. Applicable NBFCs shall devise a system of giving acknowledgement for receipt of all loan applications.

Loan appraisal and terms/conditions

1. NBFCs shall convey in writing to the borrower in the vernacular 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. NBFCs, shall furnish a copy of the loan agreement as understood by the borrower 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.

Disbursement of loans including changes in terms and conditions

1. NBFCs shall give notice to the borrower in the vernacular language or a language as understood by the borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc. NBFCs shall also ensure that changes in interest rates and charges are effected only prospectively.
2. Decision to recall / accelerate payment or performance under the agreement shall be in consonance with the loan agreement.
3. NBFC shall release / destroy (as applicable) all securities on repayment of all dues or on realisation of the outstanding amount of loan subject to any legitimate right or lien for any other claim they may have against borrower. If such right of set off is to be exercised, the borrower shall be given notice (through mail or any other available resources) about the same with full particulars about the remaining claims and the conditions under which NBFC are entitled to retain the securities till the relevant claim is settled/ paid.

General

1. NBFCs 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 applicable NBFC, 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, NBFC shall not resort to undue harassment viz; persistently bothering the borrowers at odd hours, use muscle power for recovery of loans etc.
4. As a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers of banks and NBFCs, NBFCs 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).

Responsibility of Board of Directors

The Board of Directors of NBFC lay down the appropriate grievance redressal mechanism within the organization which 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 with periodical review of the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of management.

Grievance Redressal Officer

NBFCs shall display the following information prominently, for the benefit of their customers, at their branches / places where business is transacted:

1. the name and contact details (Telephone / Mobile nos. as also email address) of the Grievance Redressal Officer who can be approached by the public for resolution of complaints against the Company.
2. If the complaint / dispute is not redressed within a period of one month, the customer may appeal to the Officer-in-Charge of the Regional Office of Department of Non-Banking Supervision of the Bank (with complete contact details), under whose jurisdiction the registered office of the applicable NBFC falls
3. Details of GRO
   Mr. Deepak Kumar Jha
   ATD Financial Servives Pvt. Ltd.
   C-316 B&C, Sector-10, Noida (UP) -201301
   Email: info@atdfinance.in
   Phone: +91 120-4250254
   

Language and mode of communicating

Vernacular language or a language as understood by the borrower.

Interest charged

An interest rate model is based on relevant factors such as cost of funds, margin and risk premium, 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 (subject to Risk Factor) of borrowers shall be disclosed to the borrower and communicated explicitly in the sanction letter.
The rates of interest and the approach for gradation of risks shall also be made available on the web-site/ Mobile Application (As available) of the companies. The information published in the website / Mobile Application (As available) or otherwise published shall be updated whenever there is a change in the rates of interest.
The annualised rate of interest will be published on the web-site/ Mobile Application (As available) so that the borrower is aware of the exact rates that would be charged to the account.

Lending against collateral of gold jewellery

While lending to individuals against collateral of gold jewellery, NBFCs shall adopt the following in addition to the general guidelines as above.

1. (1) NBFC shall put in place Board approved policy for lending against gold that shall 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. 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 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,
   6. Transparent auction procedure in case of non-repayment with adequate prior notice to the borrower. There shall 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 shall be announced to the public by issue of advertisements in at least two newspapers, one in vernacular and another in national daily newspaper,
   8. As a policy, the applicable NBFCs themselves shall not participate in the auctions held,
   9. Gold pledged shall 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. (2) The loan agreement shall also disclose details regarding auction procedure.
3. (3) Other Instructions
   1. NBFCs financing against the collateral of gold must insist on a copy of the PAN Card of the borrower for all transaction above ₹ 5 lakhs.
   2. Documentation across all branches must be standardized.
   3. NBFCs shall not issue misleading advertisements like claiming the availability of loans in a matter of 2-3 minutes.

Amendments :

1. Amendment is made in Fair Practice Code, considering the Latest amendment from RBI from time to time
2. Addition of Point No. 4 (General) regarding NBFCs shall not charge foreclosure charges/ pre-payment penalties on any floating rate as approved in the Board meeting dated 27th September 2021.

Amendments :

Further to our existing ‘Fair Practice Code' the amendment has been approved in the Board meeting dated on 29th March 2022, as an addition to the existing ‘Fair Practice Code'. Keeping in view the RBI's guidelines DoR.FIN.REC.95/03.10.038/2021-22, dated March 14, 2022 as Master Direction - Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022, other applicable guidelines as amended from time to time, and the good governance practices, the Company had amended the FPC based on these directions and added the following points in existing “Fair Practice Code”.

1. All collateral-free loans, irrespective of end use and mode of application/ processing/ disbursal (either through physical or digital channels), provided to low-income households, i.e., households having annual income up to ₹3,00,000, shall be considered as microfinance loans.
2. To ensure collateral-free nature of the microfinance loan, the loan shall not be linked with a lien on the deposit account of the borrower.
3. The customer will be provided a flexible repayment facility like 7 Days to 180 Days (Subject to their risk profile).
4. The information about the borrower regarding household income, to be submitted to the Credit Information Companies (CICs).
5. The interest rate policy is amended with Delineation of the components of the interest rate such as cost of funds, risk premium and margin, etc. which discloses pricing related information to a borrower in a standardized simplified factsheet.
6. Any fees to be charged shall be explicitly disclosed in the factsheet. The borrower shall not be charged any amount which is not explicitly mentioned in the factsheet.
7. There shall be no pre-payment penalty on microfinance loans. Penalty, if any, for delayed payment shall be applied on the overdue amount and not on the entire loan amount.
8. The Interest Rate for microfinance products is between 12.00% to 24.00% per annum.
9. The Maximum Annual Percentage Rate for microfinance lending is 24.00% per annum.
10. Any change in interest rate or any other charge shall be informed to the borrower and these changes shall be effective only prospectively.
11. Each Customer will be provided a loan card (CRN No) which shall incorporate the following information so that the below mentioned can be provided to customer on his/her demand.
I. Information which adequately identifies the borrower;
II. Simplified factsheet on pricing;
III. All other terms and conditions attached to the loan;
IV. Acknowledgements by the NBFC of all repayments including installments received and the final discharge; and
V. Details of the grievance redressal system, including the name and contact number of the nodal officer of the NBFC. (already mentioned in existing FPC)
12. The NBFC shall not engage in any harsh methods towards recovery. Without limiting the general application of the foregoing.