FAIR PRACTICE CODE
Shikhar Microfinance Pvt. Ltd. (Shikhar) is an RBI registered NBFC-MFI (Reg. No. B-14.02362), existing with a vision of empowering communities by providing financial services and livelihood opportunities. Shikhar has adopted the RBI guidelines on Fair Practice Code (FPC) and the same will be followed, while doing business.
On the basis of RBI Guidelines, Shikhar has developed a Fair Practice Code (FPC) which ensures the fair, transparent and responsible conduct of the business in letter and spirit. Shikhar has 7 core values of doing the business.
- Application of loan and their processing
- All communication to the borrowers is in vernacular language or a language understood by the borrower.
- Loan application forms include all the necessary information affecting the interest of the borrower with details of documents required.
- Shikhar has a system of giving acknowledgement to borrowers for receipt of applications, preferably, with time frame of sanction.
- Loan appraisal and term/conditions
- Shikhar conveys in writing to the borrower the amount of loan sanctioned along with the terms and conditions including annualized reducing rate of interest and method of application thereof and keep acceptance of borrower in our records.
- There is a system to furnish loan card cum sanction letter preferably in vernacular language as understood by the borrower to all the borrowers at the time of sanction/ disbursement of loans,which mentioned the amount of loan disbursed, annualized interest rate charged, process fee and other fees charged with all the term and conditions including the details of Grievance Redressal Officer.
- Disbursement of loans including changed in term/conditions
- Shikhar disburse the loan in the bank account of the respective client only.
- Shikhar does not charge any penal interest for late repayment/pre-payment/foreclosure of loan and the same is mentioned in the loan card.
- Shikhar gives notice to the borrower in vernacular language of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc. and also ensures that changes in interest rates and charges are effected only prospectively.
- Group formation and loan approval process ensure prudent self-selection of members with emphasis on concept of solidarity payment. Repayment capacity analysis is performed at each loan.
- Disclosure in loan agreement/loan card
- Shikhar has board approved standard form of loan agreement/loan card cum sanction letter in the vernacular language, disclose;
- the all the terms & conditions of loan.
- that the pricing of the loan involves only three components viz. the interest charge, processing fee charge and the insurance premium (which includes the administrative charges in respect thereof).
- that there will be no penalty charge on late repayment/pre-payment/foreclosure of loan. No security deposit/margin is collect from the borrower.
- that the borrow cant be a member of more than one SHG/JLG.
- the moratorium period between the grant of loan and the due date of repayment of first instalment.
- an assurance that the privacy of borrower data will be respected.
- Shikhar fully discloses to the clients all prices, installments, terms and conditions of all financial products, including all charges and fees, associated prices, penalties, linked products, 3rd party fees, and whether those can change over time.
- Rate of interest is annualized reducing rate to make the borrower aware of the exact rates that would be charged to their account.
- FAIR AND RESPECTFUL TREATMENT OF CLIENTS
- A statement articulating our commitment to transparency and fair lending practices, in vernacular language, displayed in the premises.
- Shikhar staffs have to be trained properly to make necessary enquiries with regard to existing debt of the borrowers. Field staffs are also trained to offer training, if required, to the borrowers at free of cost, to understand the procedure and systems related to loan product.
- The effective rate of interest charged and the details of Grievance Redressal Officer are displayed in all our offices and on website.
- Shikhar comply with the KYC guidelines of RBI and SROs (MFIN & Sa-Dhan) and carry out due diligence to ensure the repayment capacity of the borrowers.
- Adequate steps are taken to ensure the compliance of loan processing and for the disbursement of loan at pre-determined time.
- A declaration that this organization takes care that the staff extends good behavior and has a Grievance Redressal Mechanism in place.
- Shikhar has systems in place to protect the confidentially, security, accuracy and integrity of customers personal and financial information.
- Shikhars Board periodically review the interest rates &processing charge on loan and other charges, to avoid levying of excessive interest and other charges and review the compliance of Fair Practice Code and the functioning of the grievances redressal mechanism at various levels.
- NON-COERCIVE METHODS OF RECOVERY
- All recovery normally has to be made only at central designated place. Field staff can be allowed to make recovery at the place of residence or work of the borrower only if borrowers fail to appear at central designated place on 2 or more successive occasions.
- Board approved policy is in place with regard to Code of Conduct by field staff and system for their recruitment, training and supervision. The code shall stipulate minimum qualification necessary for the field staff along with necessary training tools identified for them to deal with the customers.
- Training to field staff includes programs to inculcate appropriate behavior towards borrowers without adopting any abusive or coercive debt collection / recovery practices.Penalties are imposed in cases of non-compliance by field staff with the Code of conduct.
- Recovery is done only by employees and no out sourced recovery agents are used for recovery in sensitive areas.
- Shikhar does not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans.
- GRIENVACNE REDRESSAL
- There shall be an appropriate Grievance Redressal Mechanism, approved by the Board, within the organization to resolve disputes arising in this regards. Shikhar 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 of Directors provide for periodical review of the compliance of the Fair Practice Code and the functioning of the Grievances Redressal Mechanism at various levels of management. A consolidated report of such reviews is submitted to the Board at regular intervals.
- We are displaying the following informations prominently, for the benefit of our customers, at our branches/ places where business is transacted;
- The name and contact details (Telephone/Mobile Nos. and also email address) of the Grievance Redressal Officer(Nodal Officer) who can be approached by the client for resolving the complaints against the company is as follow;
Name : Mr. VinodVarghese
Designation : Head Internal Audit
Contract No. : 011-28082352
Email Id : firstname.lastname@example.org
- If the complaint / dispute are not redressed within a period of one month, the customer may appeal to the RBI on the following addresses;
The General Manager
Deptt. Of Non-Banking Supervision (DNBS)
Reserve Bank of India
6, SansadMarg,New Delhi- 110001
- Shikhar has dedicated staff induction training includes a session on how the complaints mechanism works, the loan officers role in the process and how to appropriately manage complaints until they are completely resolved.
- Internal Control System
- There shall be in place, an in-built system of assessing responsibility for compliance to designated individuals within the company and a system of internal control including concurrent audit and periodic inspection to ensure the same.