FAIR PRACTICE CODE – AHALIA MONEY EXCHANGE AND FINANCIAL SERVICES PRIVATE LIMITED

1.          PREAMBLE/INTRODUCTION

The Fair Practice Code (FPC) has been formulated by Ahalia Money Exchange & Financial Services Private Limited (hereinafter referred to as the “Company”)  in response to guidelines issued by Reserve Bank of India vide circular DNBS.CC.PD.No.266 / 03.10.01 / 2011-12 dated 26 March 2012 titled “Guidelines on Fair Practices Code for NBFCs”.

The FPC will be applicable to all the offices of the Company including the Head Office, Rajaji Junction, Ernakulam and the Branches located across Kerala. The FPC shall be binding on all the employees and officers of the Company.

2.          OBJECTIVES

The objectives of the FPC are as under

• Adopt the best practices in dealing with the customers.
• Set challenging benchmarks and strive to achieve high operating standards for ensuring customer satisfaction
• Follow transparent, fair, ethical and legally tenable practices while conducting business.
• Provide all necessary information and inputs to customers / prospective customers and promote a mutually beneficial long term relationship.
• Facilitate a continuously growing base of satisfied customers while scrupulously avoiding acquisition of customers having doubtful credentials or criminal background.
• Enable customers to take informed decision about the financial facilities and services offered by the Company
• Provide to the customers effective overview of practices followed by the Company in respect of financial facilities and services offered by the Company to its Customers.

3.          THE FAIR PRACTICES CODE ADOPTED BY THE COMPANY COVERS THE FOLLOWING AREAS.

• Loan appraisal and terms/conditions.
• Disbursement of loans, including changes in terms and conditions.
• Rate of Interest and Charges
• Policy on KYC, Appraisal, insurance, storage of securities, Auction etc.
• Recovery Of Dues, Exercise Of Lien & Delivery Of Security
• Confidentiality.
• Marketing & Promotion
• Customer Service & Grievance redressal mechanism.
• General Provisions.

4.          DECLARATIONS AND COMMITMENTS

• The Company undertakes to abide by all applicable laws, regulations and guidelines passed / issued by the Regulators (Reserve Bank of India, SEBI, IRDA etc.) and other competent authorities such as Government, Local Authority etc.
• The Company will provide clear and full information about its products and services to its customers / prospective customers and will not resort to any misleading or potentially misleading advertising or publicity.
• The Company undertakes to take all possible and reasonable measures to secure the safe custody of the security pledged by the customer and to compensate the customer for any accidental, inadvertent or fraudulent loss of the security whilst in the custody of the Company.
• The Company is committed to put in place a system for promptly addressing complaints and suggestions of the customers supplemented with a structured Grievance Redressal Mechanism having an escalation matrix.

5.     LOAN APPRAISAL AND TERMS AND CONDITIONS

The Company shall make available loan application forms in local language to all prospective customers free of cost at the concerned branches mentioning also the supporting documents to be submitted along with.

An acknowledgement for receipt of duly completed loan application forms will be given to the customers in all cases.

Thereafter loan appraisal occurs. Once the appraisal is done loan sanctioning/rejection will be intimated to the customer. The Company shall disclose all relevant information relating to a loan / product such as eligible loan amount, interest rate, charges, penal/overdue interest, interest calculation methodology, rebate on interest etc. before sanction of the loan to enable the customer / prospective customer to take an informed decision. The Customer / prospective customer will also be provided, on request, the detailed terms and conditions of the loan before sanction.

The Company shall ensure that a loan sanction letter (pawn ticket) is given to the customer containing all the terms and conditions governing the loan facility in the local language or other language understood by the customer. The loan sanction letter (pawn ticket) will also mention the loan amount, loan account number, interest rate, charges, etc. The loan sanction letter (pawn ticket) which will bear the signature of the authorized official of the company will also serve as a receipt for the security (gold) pledged at the branch by the customer.

6.          DISBURSEMENT OF LOANS 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.

 The Company shall 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 the Company 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 the Company is entitled to retain the securities till the relevant claim is settled / paid.

The Company shall not in the normal course make any changes / modifications in the terms and conditions of the loan once sanctioned, including 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

7.          RATE OF INTEREST AND CHARGES

 The Company shall frame appropriate internal procedures for determining the interest rates and processing and other charges, taking into account various parameters involved such as cost of funds, overheads, risk premium etc, if any and also ensure that they are not excessive.

At the time of availing of a loan, the company will provide the customer with information on the rate of interest applicable to the customer’s loan.

The rate of interest will be annualized rates so that the borrower is aware of the exact rates that would be charged on the loan.

Interest will be charged on the daily balance outstanding at monthly rest on the basis of the actual number of days from the date of availing the loan to the date of closure of the loan, both days inclusive.

Rebate on interest rates meant to encourage timely periodical payment of interest under each scheme, levying of additional interest for discouraging loans from crossing the sanctioned period etc., shall be mentioned clearly in the loan agreement.

No pre-payment penalties/foreclosure charges will be levied on gold loans in the normal course. In case such charges are applicable for any scheme, it will be disclosed in the sanction letter.

The Company shall ensure that changes in interest rates and charges are affected only prospectively

7.1  CHARGES

The company will make proper disclosure of applicable charges to the customer at the time of availing products and services from the company. The company shall not levy any hidden charges.

 Any change to the extant charges will be effected only on prospectively.

8. POLICY ON KYC, APPRAISAL, INSURANCE, STORAGE OF SECURITIES, AUCTION etc

 The Company shall put in place a policy duly approved by the Board covering the following aspects:

 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.

Proper appraisal procedure for assessing the value and purity of the jewellery accepted as collateral security.

 Declaration shall be obtained from the borrower confirming ownership of gold jewellery.

All branches shall have proper storage facility of either Strong Rooms or Safes conforming to ISI Standards of reputed make to store the jewellery in safe custody. The sets of 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 security shall be adequately and appropriately insured. The auction procedure in case of non – repayment shall be transparent. Prior notice to the borrower shall be given before the auction and there shall not be any conflict of interest. The auction process shall ensure that an arms length relationship in all transactions during the auction is maintained including with group companies and related entities. The details regarding procedure for auction shall be disclosed in the loan document for availing the loan. The auction will be only through auctioneers approved by the Board and the Company shall not participate in the auction. The auction shall be announced to the public by issuing advertisements in at least two newspapers, one in vernacular language and the other in a national daily newspaper.

Any fraud in the functioning of the Company shall be enquired into by the appropriate authority and suitable punitive measure shall be taken by the appropriate disciplinary authority. Any review of the decision of the disciplinary authority shall be carried out by the Managing Director.

The amount due to the Company by the Customer, being the aggregate of the principal and the up to date interest as well as other expenses like expenses for conducting auction, will be adjusted against the sale proceeds. Whereas, the surplus, if any available, will be refunded to the customer, deficit if any shall have to be paid by him / her. If at any time after the loan is granted, the Company has reasons to believe that a Customer has obtained loan through misrepresentation of facts and has failed to repay the loan with interest on demand, the Company shall not be bound to follow the above procedures but shall be at liberty to sell / auction the Gold Ornaments pledged by him / her in the manner deemed appropriate under the prevailing circumstances/laws

9. RECOVERY OF DUES, EXERCISE OF LIEN & DELIVERY OF SECURITY

The Company will not, as a matter of fair dealing, normally recall the loan before the initially agreed tenure except in unanticipated or abnormal circumstances where the Company’s interests are adversely affected e.g. when the security value diminishes substantially, when the quality of gold is not found to be acceptable, due to any regulatory / government directives etc. In all such cases proper and reasonable notice shall be given to the customer recalling the loan before expiry of the normal tenure.

The Company will make all possible soft or persuasive efforts to get the customer to repay the dues without resorting to disposal of the security. The Company does not accept nor will it encourage the use of any coercive or hard measures to recover its dues from the customer.

Company’s dues collection policy is built on courtesy, fair treatment and persuasion. the company believes in fostering customer confidence and long-term relationships. The staff or any person authorized to represent the company in collection of dues or/and security repossession will identify himself/herself and interact with you in a civil manner. The company will provide the customer with all the information regarding dues and will give sufficient notice for payment of dues.

The Company will deliver the security (gold) to the customer immediately upon settlement of the loan in the same condition as was at the time of sanction of the loan. In case of any damage caused to the security (gold) due to mishandling by its employees, the Company shall at its cost get the damage repaired or alternately pay reasonable compensation to the customer on a case to case basis. If the security (gold) has signs of damage thereon, before being taken custody of by the Company at the time of sanction of loan, the fact will be briefly incorporated in the sanction letter (pawn ticket).

The Company will exercise only legitimate right of lien over the pledged security or such cash surplus as may arise upon settlement of existing loans at any time. Such right of lien shall arise only if the customer has any other dues, either directly or as guarantor, and will be subject to proper intimation of such right of lien being given to the customer by the Company.

The Company shall issue a signed and, normally, a system generated receipt for all cash payments made by the customer immediately. The Company shall also accept payments via cheques, demand drafts, electronic transfers etc. subject to the condition that return of the security (gold) will be made only after confirmation of realization.

Even though the loan sanction letter (pawn ticket) contains all applicable terms and conditions of the loan the Company shall, nevertheless, endeavour, on a best effort basis, to send advices, reminders etc. regarding due date for payment of interest, principal etc. by letter, courier service, telephone , SMS etc.

The Company shall, on demand, provide the customer or his duly authorized representative with a statement of the loan account at any time during the currency of the loan or immediately upon closure. However, the Company may, at its discretion, require payment of reasonable processing charges by the customer for providing statement of account if such demand is made 30 calendar days after closure of the account.[D2]

The Company will resort to disposal of security (gold) only as a last resort and that too after adequate and proper notice is served on the customer to repay the dues. Such notice will be as per the terms contained in the sanction letter (pawn ticket) and also in compliance with applicable laws and regulatory guidelines. The disposal of the security (gold) will be taken up through public auction when the customer does not positively respond to the communications sent by the Company to close the loan account along with interest and other charges.

Where the Company proposes to dispose of the security even before the normal tenure of the loan based on the rights conferred on the Company vide loan application and loan sanction letter (pawn ticket) adequate and proper notice will be served on the customer before such action is initiated for recovery of dues.

The Company prefers and encourages customers to take back delivery of the security immediately upon full settlement of all dues. However, should there be exceptional instance of the Customer being unable to take delivery of the security (gold), not attributable to the inability of the Company, after closure of the loan account reasonable safe custody charges may be payable which will be duly advised to the customer or displayed in the branch premises and the Company’s website.

10.  CONFIDENTIALITY

 Unless authorized by the borrower, the Company will treat all personal information as private and confidential. The Company may not reveal transaction details of the borrowers to any other persons except under following circumstances.

• If the Company is required to provide the information as per regulatory directives to any statutory or regulatory body or bodies.
• If arising out of a duty to the public to reveal the information.
• If it is in the interest of the borrowers to provide such information (eg. Fraud prevention).
• If the borrower has authorized the Company to provide such information to its group/associate/entities or Companies or any such person/entity as specifically agreed upon.

 11.      MARKETING & PROMOTION

 The Company shall not deliberately promote a product with any ulterior / selfish motives or contrary to the customer requirements or expectations as disclosed by the customer. The Company will ensure that its personnel engaged in marketing and operations are suitably trained and instructed so as to preclude selling of its products by misrepresentation to the customer / prospective customer.

The Company will not indulge in profiteering by charging usurious rates of interest on loans or take undue advantage of adverse market conditions. The rates of interest will be based on variables such as cost of funds, risk premium, loan scheme, loan per gram, profit margin etc. and shall be in conformity with the Interest Rate policy of the Company and Regulatory Guidelines from time to time. It shall also, by and large, be in tune with industry practices and benchmarks.

Full and updated information regarding loan schemes, rate of interest, loan per gram, charges etc. will be displayed on the website of the Company and also displayed in the branches. Complete or select information will also be made available through various media channels, posters, brochures, notices, displays etc. based on the decisions of the management of the Company from time to time.

 12.  CUSTOMER SERVICE & GRIEVANCE REDRESSAL

The Company will implement all possible steps to prevent and minimize customer complaints / grievances

Towards ensuring redressal of disputes arising out of decisions of the functionaries of the Company, the following mechanism is put in place.

The decisions of any official below the Branch Manager shall be heard and disposed of by the Branch Manager

Decisions of Branch Managers shall be heard and disposed of by the Regional Manager.

If not satisfied with the decision of the Regional Manager, the customer has the option to escalate the matter to Grievances Redressal Cell at the Company’s Head Office at Kochi. The incumbent grievance redressal officer is Mr. Manoj Toms, Chief Executive Officer.

The contact details of the Grievance Redressal Officer and also that of the RBI Ombudsman/Regional Office of the Reserve Bank of India shall be displayed in all the Branches for the benefit of customers.

If the complaint/dispute is not redressed within a period of one month, the customer may appeal to the NBFC Ombudsman of the Regional Office of DNBS of RBI as per the contact details displayed in the branch.

Proper training shall be imparted to staff on an ongoing basis with a view to improving staff behavior and customer service.

The compliance of the fair practices code as well as the functioning of the Customer Grievances Redressal Cell shall be reviewed by a Director of the company periodically.

13. GENERAL

The Company shall display the normal business hours at the respective Branches, the list of holidays and notify the changes, if any, by way of a notice displayed in the premises of the branch or through press notification.

Personal information of the customer will not be shared with unauthorized persons or agencies or third parties by the Company. However, the Company will be bound to honour and comply with legal or regulatory requirements, if any, in this matter obligating it to part with such information even without notice to the customer.

The Company shall refrain from interfering in the affairs of the borrower except for the purposes provided in the terms and conditions of the letter of undertaking (unless new information, not earlier disclosed by the borrower, has come to the notice of the Company).

In the matter of recovery of loans, the Company shall not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans etc. The staff of the Company shall be adequately trained to deal with the customers in an appropriate manner so as to ensure proper behavior.

The Company will call delinquent customers between 0900 hrs to 1800 hrs unless special circumstances of the borrower’s business require them to call them otherwise outside the hours mentioned.