Fair Practice Code
The Reserve Bank of India (RBI) has issued guidelines on Fair Practices Code for Non- Banking Financial Companies (NBFCs) as amended from time to time thereby setting standards for fair business and corporate practices while dealing with their customers. Jalan Chemical Industries Private Limited (“the Company” or “JCIPL”) hereby furnishes the Fair Practices Code (“the FPC”) based on the guidelines issued
by RBI. This sets minimum Fair Practice standards for the Company to follow when dealing with customers. The Company shall also make appropriate modifications in the FPC to conform to the standards that may be prescribed by RBI from time to time.
APPLICABILITY OF FAIR PRACTICE CODE
This Fair Practices Code applies to the following categories of products and services offered by us (currently offered or which may be introduced at a future date)
Loan and other products in the nature of financial assets.
Third Party products offered through a Company`s Agent, Partner or Outsourced Service Provider.
The FPC is applicable to the above irrespective of whether the same is provided physically, over the phone,
on the internet or by any other method whatsoever, existing or futuristic.
The code has been developed with an objective:
- To promote good, fair and trust-worthy practices by setting minimum standards in dealing with customers.
- To enable greater transparency for customers in having a better understanding of the product, taking informed decisions and reasonably expect of the services.
- To ensure compliance with legal norms in matters relating to recovery of advances.
- To ensure building customer confidence in the Company.
- To promote a fair and cordial relationship between customer and the Company.
- To strengthen mechanisms for redressal of customer grievances
APPLICATION FOR LOANS & THEIR PROCESSING
The customers will be made aware of the required documents at the time of application of loan. However, the Company may, depending on the credit underwriting requirements require other documents from the customers, as it may deem fit.
All Loan Agreement shall contain detailed information relating to the terms and conditions governing the Loan and other relevant information affecting the interest of our valuable customers.
The contents of loan documents will be in English as the language is understood by all our borrowers which further ensures that the customer understands the terms and conditions governing the Loan.
Sanction letter 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.
Wherever applicable, the Company shall follow the system of issuing acknowledgements for receipt of all loan applications. The Company will consider all the documents submitted and the information provided, verify the credit worthiness of the customer and evaluate the proposal at its sole discretion. As a matter of policy and customer service, loan applications are sanctioned / rejected immediately.
The completed loan agreement shall indicate the loan amount to be disbursed, information which affects the interest of the borrower, the amount of interest applicable, processing fee (if any), dates of interest payments due, loan tenure etc.
LOAN APPRAISAL AND TERMS AND CONDITIONS
JCIPL shall convey in writing to the borrower in English 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 amount of interest, overdue interest, tenure of loan, commencement date, etc and method of
application thereof and shall keep the acceptance of these terms and conditions by the borrower on its record.
The Company shall 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.
Company shall mention the penal interest charged for late repayment in bold in the loan agreement.
DISBURSEMENT OF LOANS AND CHANGES IN TERMS AND CONDITIONS
At JCIPL we shall value openness and transparency in the system. Company shall keep the customers informed in English language as understood by the borrower, in the event of any modification in terms and conditions, repayment schedule, interest rates, security, and other changes material to customer’s
relation with JCIPL. Any changes in interest rates and charges shall be effected only prospectively and would be given favourable notice.
Company or any of the employee of the Company shall not interfere in the affairs of the borrower except as provided under the circumstances mentioned in the agreement.
If any new information or findings not previously disclosed by the borrower comes to the notice of JCIPL, the above restriction shall not apply.
2. Recovery Process:
If any recovery proceedings need to be initiated, these shall be conducted in accordance with the rights provided under the Agreement and in accordance with legally accepted norms. JCIPL staff or any person authorized to represent the Company in collection of dues shall identify himself / herself . The Company or authorised representative shall provide the customers with all the information regarding overdue. The staff shall be adequately trained to deal with the customers in an appropriate manner.
3. Foreclosure charges/ Pre-payment penalties on floating rate term loans:
As a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers of the Company, Company shall not charge foreclosure charges/ prepayment penalties on all floating rate term loans sanctioned to individual borrowers, if any
Unless authorized by the borrower, the Company will treat all his 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 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 (e.g. fraud prevention);
- If the borrower has authorised the Company to provide such information to its group / associate / entities or companies or any such person/ entity as specifically agreed upon.
KNOW YOUR CUSTOMER GUIDELINES
JCIPL shall explain the requirements of KYC guidelines to its customers and inform them about the documents required for establishing the identity of the customer before loan sanctioning, account opening and operation.
JCIPL would obtain only such information to meet with company’s KYC, Anti-Money Laundering or any other statutory requirements. In case any additional information is asked for, it will be sought separately and shall specify the objective of obtaining such additional information.
INTEREST RATE POLICY
Reserve Bank of India (RBI) had vide its Circular DNBS / PD / CC No. 95/ 03.05.002/ 2006-07 dated May 24, 2007 advised that Boards of Non-Banking Finance Companies (NBFC’s) lay out appropriate internal principles and procedures in determining interest rates, processing and other charges.
This was reiterated vide RBI’s circular DNBS (PD) C.C. No. 133 / 03.10.001/ 2008-09 January 2, 2009, whereby which RBI advised the NBFCs to adopt appropriate interest rate model taking into account relevant factors and to disclose the rate of interest, gradations of risk and rationale for charging different rates of interest to different category of borrowers.
JCIPL’s policy should always be read in conjunction with RBI guidelines, directives, circulars and instructions. The company will apply best industry practices so long as such practice does not conflict with or violate RBI guidelines.
In order to ensure its standards of transparency, in conformity with the stipulations of the RBI’s directives, the Company has adopted the following interest rate policy for determining Interest Rates, Processing and Other Charges. This Policy applies to clients whose loans are booked in the Company.
Tenor of the Loan – The interest rate charge will depend on the term of the loan; structure of the loan; terms of payment of interest.
Internal cost loading – The interest rate charged will also take into account costs of doing business.
Internal and External Costs of Funds – The rate of interest charged is also affected by the rate at which the funds necessary to provide loan facilities to customers are sourced, normally referred to as the Company’s external cost of funds. Internal cost of funds being the expected return on equity issued, is
also a relevant factor. The interest rate charged will also take into account costs of doing business.
Credit Risk – As a matter of prudence, bad debt provision cost should be factored into all transactions. This cost is then reflected in the final interest rate quoted to a customer. The amount of the bad debt provision applicable to a particular transaction depends on our internal assessment of the credit strength
of the customer.
Other Factors – The rate of interest shall be based on the cost of borrowed funds, matching tenor cost, market liquidity, RBI policies on credit flow, offerings by competition, tenure of customer relationship, market reputation, cost of disbursements, inherent credit and default risk in the products and customer per se arising from customer segment, profile of the customers, stability in earning and employment, deviations permitted, ancillary business opportunities, future potential, group strength and overall customer yield, nature and value of primary and collateral securities, past repayment track record of the customers, external ratings of the customers , industry trends, switchover options, canvassed accounts etc.
The company may adopt discrete interest rate model whereby the rate of interest for same product and tenor availed during same period by customers would not be a standardized one but could be different for different customers depending upon consideration of any or combination of a few or all factors listed out above.
The interest amount would be intimated to the customer.
The interest rates may be offered on a fixed, floating, variable basis which would be up to 72% annualised rate of interest.
Interest rates shall be intimated to the customers at the time of sanction/ availing of the loan and the equated instalments/Balloon Payment/Bullet payment apportionment towards interest and principal dues shall be made available to the customer.
APPROACH FOR RISK GRADATION
Jalan Chemical Industries Private Limited (JCIPL) grants credit facilities to those customers who have both the intention and the ability to discharge their obligations. To execute smooth underwriting process the Company carries out different processes as per Know Your Customer guidelines and allocates credit grade for each customer.
The risk premium attached with a customer shall be assessed inter-alia based on the following factors:
a) profile and market reputation of the borrower,
b) inherent nature of the product, type / nature of facility,
c) tenure of relationship with the borrower group, past repayment track record and historical performance of our similar clients,
d) group strength, overall customer yield, future potential, repayment capacity based on cash flows and other financial commitments of the borrower, mode of payment
e) interest, default risk in related business segment,
h) regulatory stipulations, if applicable,
i) and any other factors that may be relevant in a particular case;
The individual assessment criteria for the customer credit grading can be classified into each of these categories. All credit submissions will be classified into three categories: Low Risk, Medium Risk and High Risk.
PROCESSING / DOCUMENTATION AND OTHER CHARGES
All processing / documentation and other charges recovered are expressly stated in the Loan documents. They vary based on the loan product, geographical location, customer segment and generally represent the cost incurred in rendering the services to the customers.
The practices followed by other competitors in the market would also be taken into consideration while deciding the charges.
Processing charges will be charged on case-to-case basis.
All applicable taxes shall be charged as per the guidelines issued by the Government from time to time.
PENAL INTEREST / LATE PAYMENT CHARGES
Besides normal interest, the Company may collect penal interest / late payment charges for any delay or default in making payments of any dues. These penal interest / late payment charges for different products or facilities would be decided by the Company from time to time.
The various commitments outlined and made by the Company shall be applicable under the normal operating environment. In the event of any Force Majeure circumstances, the Company may not be able to fulfil the objectives under the FPC to the entire satisfaction of the borrowers, the stakeholders and the public in general.
BOARD OF DIRECTOR MEETINGS AND REVIEW
Board of Directors shall oversee the implementation of the code and shall review its functioning periodically.
27 AB Royd Street, Kolkata- 700016, Telephone- 033 66452400