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Fair Practices Code



The Fair Practice code of the Company paves the way to good corporate governance and it is the symbol of high level of corporate practices followed by the Company. This has been developed by following the Guidelines on Fair Practice Code issued by Reserve Bank of India.

Objectives:

  • To build an effective relationship with the customers.
  • To have Good corporate practices.
  • To develop an effective management
  • For quick and effective decision making.

Application for loans and processing:

  • The Company has presence in Kerala and Tamil Nadu and communications to the Borrower shall both in vernacular language and English language according to the knowledge of the borrower.
  • Loan application forms shall be equipped with all necessary information which affects the interest of the borrower.
  • Loan application forms contains all the documents required to be submitted or executed by the borrower.
  • All loan applications shall be disbursed within time span of thirty days and due acknowledgement for the application shall be endorsed with the disbursement period.

Loan appraisal and Terms/Conditions:

  • The Company shall constitute and authorize a Loan Appraisal committee on Annual basis vide Board Resolution to be passed in the first meeting of the financial year.
  • The Loan appraisal committee shall constitute of Directors, Members, Staffs and such other persons as the Board thinks fit and one of the Director who is part of the committee shall be Chairman of the Committee.
  • The Loan appraisal committee shall evaluate the loan applications submitted by the Borrower by scrutiny of application and verification of the details submitted by the borrower on the same day of application but not exceeding 15 days of submission of application.
  • If all the details mentioned in the application is valid and confirmed, the Chairman of Loan Appraisal Committee shall issue a sanction letter along with the copy of loan document and annexures to the Borrower on the same day of approval by the Loan Appraisal Committee but not exceeding 3 days of the approval by the Loan Appraisal Committee.
  • The sanction letter and copy of loan document and annexuresshall contain all necessary information including amount of loan, rate of interest, method of application and such other terms and conditions as the Committee deems fit. A copy of the same shall be kept by the Company as acknowledgement in the particular customer file which is serially numbered.
  • The penal interest that will be charged for late payment shall be mentioned in bold letters in the sanction letter and copy of loan document and annexures.
  • Loan shall be disbursed within three (3) days of the approval by the Loan Appraisal Committee subject to the submission of all required documents as informed earlier to the borrower.

Disbursement of loan including changes in terms and conditions:

  • 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. Any change in the terms and conditions including interest rates, service charges, prepayment charges etc. shall be informed to the borrower in the vernacular or a language known to the borrower. 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.
  • Decision to recall / accelerate payment or performance under the agreement should be in consonance with the loan agreement.
  • The Company should 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. 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.

Rate of Interest:

  • The Company shall frame appropriate internal principles and procedures for determining the interest rates and processing and other charges, if any and also to ensure that they are not excessive. 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 principles and procedures.
  • The Company shall follow annualized rate of interest method only.
  • The information published in the website (www.iclcredits.com) including the rate of interest, gradation of risk etc shall be updated whenever there is change in the rates.
  • 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.

General:

  • The Company shall not interfere in the affairs of the Borrower except for the purposes provided in the terms and conditions of the loan agreement.
  • In case of request from the borrower for transfer of borrowal account, the Company shall the appraisal and disbursement procedures as mentioned above and the consent or otherwise i.e. objection of the Loan Appraisal Committee should 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.
  • 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 train staff especially recovery staffs to avoid rude behaviors and how to approach the borrower in a polite way. The Company shall conduct training for all its staffs in annual basis and an induction programme should be conducted in weekly basis for the new entrants to the Company. Training to field staff shall include programs to inculcate appropriate behavior towards borrowers without adopting any abusive or coercive debt collection / recovery practices.
    Recovery should normally be made only at a central designated place. 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 central designated place on two or more successive occasions.
    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. The Code should lay down minimum qualifications necessary for the field staff and shall have necessary training tools identified for them to deal with the customers.
    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. Generally only employees and not out sourced recovery agents be used for recovery in sensitive areas.

  • The Company shall not charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers.
  • Responsibility of Board Of Directors.

    The Board shall constitute a grievance redressal committee on Annual basis vide Board Resolution to be passed in the first meeting of the financial year.
    The grievance redressal committee shall formulate three layers and should 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 shall conduct periodical review of the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of management on quarterly basis. A consolidated report of such reviews may be submitted to the Board, as may be prescribed by it.

  • The FPC in vernacular language shall be displayed by the Company in its office and branch premises.
  • A statement shall be made in vernacular language and displayed by the Company in their premises and in loan cards articulating their commitment to transparency and fair lending practices.
  • Training if any, 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.
  • 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.
  • The KYC Guidelines of RBI shall be complied with.
  • 1Due diligence shall be carried out to ensure the repayment capacity of the borrowers.

Grievance Redressal Officer :

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

  • (a) 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 as under.
    Mr. K.G.Anilkumar
    Managing Director
    M/s.Irinjalakuda Credits & Leasing Company Limited
    Door No.39, Flat No.1, Ramamoorthy Street,
    Thandavamoorhti Nagar, Valasarawakkam,
    Chennai -600 0087
  • (b) 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 DNBS of RBI (complete contact details), under whose jurisdiction the registered office of the NBFC falls as under.
    General Manager
    Department of Non-Banking Supervision,
    Reserve Bank of India, Fort Glacis,
    RajajiSalai, Chennai - 600 001
    Phone No: 044-25393406, Fax No: 044-25393797
    Email ID: dnbschennai@rbi.org.in

Language and mode of communicating Fair Practice Code:

The Company shall prepare the Fair Practices Code in English language as the same is understood by the borrowers and the same should be put in the website (www.iclcredits.com).

Regulation of excessive interest charged by the Company:

  • The Board of Directors 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.
  • 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 should be updated whenever there is a change in the rates of interest.
  • The rate of interest should be annualized rate so that the borrower is aware of the exact rates that would be charged to the account.

Repossession :

  • The Company must have a 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;

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.

Gold loan Policy:

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

  • The Company shall make a Board approved policy for lending against gold that should inter alia, cover the following:

    KYC procedures.
    ID Proof and Address proof of the Borrower.
    PAN, if any.
    Photo (1 No)
    Appraisal procedure for gold
    Declaration from the borrower confirming ownership of jewellery.
    Proper assaying procedure for the jewellery received
    Internal systems to satisfy ownership of the gold jewellery
    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

  • All branches shall have proper storage facility of either Strong Rooms or Safes conforming to ISI Standards of approved make to store the jewellery in safe custody. The keys to the strong room/safe shall be held separately by two officials and the operations thereof shall be done jointly.
  • The staff shall be imparted training on a continuous basis to ensure that the guidelines covering security issues are strictly adhered to. The gold items shall be periodically inspected by the internal auditors to ensure quality, quantity and proper storage

    The jewellery accepted as collateral should be appropriately insured,
    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
    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. Aution procedure shall be imparted in the loan document.
    As a policy, the Company themselves should not participate in the auctions held
    Gold pledged will be auctioned only through auctioneers approved by the Board
    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.
    The loan agreement shall also disclose details regarding auction procedure.

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