Fair Practices Code

Rationale

The Reserve Bank of India (RBI), vide its notification number DNBS (PD) CC No.80/03.10.042/2005-06 dated September 28, 2006 and subsequently through various other notifications, has prescribed the broad guidelines on fair practices that are to be framed and approved by the Board of Directors of all Non-Banking Financial Companies (NBFCs). All of this has been consolidated in the last Master Circular – Fair Practices Code notification number DNBR.(PD).CC.No.054/03.10.119/2015-16 dated July 1, 2015.

The requirement further prescribes that the Fair Practices Code (FPC) so framed and approved by the Board of Directors should be published and disseminated on the website of the company, if any, for the information of the public.

As a result, Kalandri Capital Private Limited (“Kalandri” or the “Company”) has framed the comprehensive Fair Practices Code which is covered in this document.

Objective of the Code

This Code has been developed to:

• promote good, fair and trustworthy practices by setting minimum standards in dealing with the customers;
• follow transparent, fair, ethical and legally tenable practices while conducting business;
• encourage market forces, through competition, to achieve higher operating standards;
• facilitate a continuously growing base of satisfied customers.

The Fair Practices Code is aimed to provide to the customers an effective overview of practices which will be followed in respect of the financial facilities and services offered by Kalandri to its customers. The Code will facilitate customers to take informed decisions in respect of the financial facilities and services to be availed by them, and will apply to any loan that Kalandri may sanction and disburse.

Commitments and Declarations

1. Kalandri undertakes to abide by all applicable laws, regulations and guidelines passed / issued by the regulators and other competent authorities such as Government, Local Authority etc.
2. Kalandri shall provide all its customers efficient, professional and courteous service.
3. Kalandri shall provide accurate and timely disclosure of terms and conditions, costs, rights and liabilities as regards financial transactions.
4. Kalandri shall not discriminate customers on grounds of religion, caste, gender or language.
5. Kalandri shall provide clear and full information about its products and services to its customers / prospective customers and will not resort to any misleading or potentially misguiding advertisement or publicity.
6. Kalandri shall also provide information about the financial schemes in Hindi and/or English and/or the local vernacular language as understood by the borrower.
7. Kalandri shall not take advantage of any unintentional or clerical error made by the borrower while transacting business.
8. Kalandri shall resolve all customer complaints promptly.

Applicability

Kalandri will ensure that the Fair Practices Code (FPC) is implemented across the organisation. Kalandri's fair lending practices shall apply across all aspects of its operations including loan origination, processing, servicing and collection activities. In order to ensure implementation of the FPC we will undertake suitable training, counselling, monitoring, auditing programs and internal controls and optimal use of technology.

Additional guidelines on fair practices mandated by RBI vide notification dated March 26, 2012, for NBFC-MFI and for NBFCs engaged in lending against collateral of gold jewellery are not applicable to Kalandri, since it does not engage in such activities.

Non-Discrimination Policy

Kalandri shall not discriminate on the basis of caste, colour, creed, race, religion, sex or handicap.

Loan Application and its Processing

1. Kalandri shall make available loan application forms in the local language to all prospective customers, mentioning also the supporting documents to be submitted along with them.
2. Loan application forms issued by Kalandri shall include necessary information which affects the interest of the borrower (eligible loan amount, interest rate, charges, penal/overdue interest, interest calculation methodology, rebate on interest etc.) so that a meaningful comparison with the terms and conditions offered by other NBFCs can be made and an informed decision can be taken by the borrower.
3. Subject to receipt of all the requisite documentation and information, loan applications shall be disposed of within 30 days from the date of receipt of the application form complete in all respects. In any case the borrower will be kept informed by the Kalandri team about the status of the application from time to time.
4. If any additional details / documents are required, the same shall be intimated to the borrowers immediately.

Loan Appraisal and Terms / Conditions

1. Kalandri shall conduct due diligence on the credit worthiness of the borrower, which will be an important parameter for taking a decision on the application. The assessment would be in line with Kalandri's credit policies, norms and procedures in respect thereof.
2. The borrower would be informed in writing in the vernacular language as understood by the borrower, by means of a sanction letter or otherwise, of the amount of loan sanctioned. The said letter shall contain the terms and conditions including the annualised rate of interest and the method of application thereof. Kalandri shall keep on record the acceptance of these terms and conditions by the borrower.
3. Kalandri shall furnish a copy of the loan documents containing the terms and conditions of the loan (“Loan Documents”), preferably in the vernacular language as understood by the borrower, along with a copy of all enclosures quoted in the Loan Documents to all the borrowers at the time of sanction / disbursement of loans. Kalandri shall ensure that the Loan Documents and all enclosures furnished to all borrowers contain the terms and conditions and the rate of interest. Further, Kalandri shall clearly mention the penal interest charged for late payment in the Loan Documents.
4. Kalandri shall not in the normal course make any changes / modifications in the terms and conditions of the loan, including the rate of interest, which could adversely affect the customer financially or otherwise. In abnormal circumstances when such changes / modifications are inevitable, keeping in view the new circumstances, adequate and proper notice shall be given to the customer about any such change / modification.

Disbursement of Loans Including Changes in Terms / Conditions

1. Kalandri shall frame appropriate internal principles and procedures for determining and ensuring that the interest rates and processing and other charges are not excessive. Kalandri shall, at the time of disbursal, ensure that the interest rate and processing and other charges on loans and advances are in strict adherence to the above-referred internal principles and procedures.
2. The disbursement will be done immediately upon compliance with all the terms and conditions of the sanction by the borrower.
3. Kalandri shall give a notice to the borrower in the vernacular language as understood by the borrower, of any change in the terms and conditions including disbursement schedule, interest rates, service charges, pre-payment charges etc. Kalandri shall also ensure that changes in interest rates and charges are effected only prospectively.

Post-Disbursal Monitoring / Supervision

1. Any decision to recall / accelerate payment or performance under the Loan Documents shall be in consonance with the Loan Documents.
2. All securities offered by the borrower shall be released 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 Kalandri may have against the 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 Kalandri is entitled to retain the securities till the relevant claim is settled / paid.

General

1. Kalandri shall not interfere in the affairs of the borrower except for the purposes provided in the Loan Documents, unless new information not earlier disclosed by the borrower has come to the notice of Kalandri.
2. In the matter of recovery of loans, Kalandri shall not resort to undue harassment.
3. Kalandri may arrange for enforcing security charged to it of the delinquent borrower, if required, with an aim only to recover dues.
4. Kalandri shall ensure that the entire process of enforcing its security, valuation and realisation thereof is fair and transparent.
5. In case of receipt of a request from the borrower for transfer of the borrower's account to another NBFC or Bank, the consent or otherwise (i.e. objection) of Kalandri, if any, shall be conveyed within 21 days from the date of receipt of such request in writing. Such transfer shall be as per transparent contractual terms in consonance with law.

Complaint Redressal Mechanism

1. A separate e-mail ID will be created where customers can send their grievances via e-mail.
2. After examining the matter, Kalandri will endeavour to send the customer its response within four weeks and intimate the customer how to escalate the complaint to a higher level, if they are not satisfied with the response. Kalandri has set up product-wise turn-around time (“TAT”) for resolution of customer grievances within the above period of four weeks, and shall ensure to resolve the complaints within such defined TATs.
3. At the office of Kalandri, a notice will be put up informing the customers about the escalation mechanism and the Grievance Redressal Officer (including the name and contact details). If the grievance is not redressed within the Turn-Around-Time (TAT) referred above, the customer may appeal to:
   The Officer in Charge,
   Department of Non-Banking Supervision,
   Reserve Bank of India,
   3rd Floor, Opposite Mumbai Central Railway Station,
   Byculla, Mumbai – 400 008,
   Email id: dnbsmro@rbi.org.in
4. Kalandri shall request the customer to provide feedback on the services rendered. This can be done through direct contact by staff or through specific customer satisfaction surveys that may be conducted from time to time.
5. A periodical review of the Fair Practices Code and the functioning of the Grievance Redressal Mechanism at various levels of management would be undertaken by Kalandri, and a consolidated report of such reviews shall be submitted to the Board of Directors of Kalandri at regular intervals.

Policy for Determining Interest Rates, Processing and Other Charges

1. To ensure that borrowers are not charged excessive interest rates and charges on loans and advances by Kalandri, the Board has adopted a Policy for determining interest rates, processing and other charges (“Interest Rate Policy”). Further, the Board also undertakes periodical review of the Interest Rate Policy.
2. Kalandri has been lending at interest rates based on the weighted average cost of funds, operating cost, administrative cost, risk premium, and expected return for stakeholder value on a sustainable basis as approved / revised by the Board as and when required. The rate of interest shall be fixed on the basis of the risk gradation of the client and shall be charged on a per annum basis. The risk committee will monitor the rates periodically.
3. Kalandri shall intimate the borrower of the loan amount and rate of interest at the time of sanction of the loan, along with the tenure.
4. The processing fee, if any, shall be determined on the basis of the quantum of work involved in credit appraisal, volume of documentation and other expenses involved in the transaction. The rate of interest is subject to change as the situation warrants due to market compulsions and change in regulatory norms, and is subject to the discretion of the management on a case-to-case basis.
5. Kalandri shall abide by this Fair Practices Code following the spirit of the Code and in the manner it may be applicable to its business.