Fair practice code

FAIR PRACTICE CODE

As per Reserve Bank of India (RBI) ‘s Circular DNBS.CC.PD.No.266/03.10.01/2010-11 dated March 26, 2012, the Board of Directors have adopted a Fair Practices Code for Higher Education Financing Agency (“Company”) is outlined herebelow :

 

Code No
1. All communications to the borrower will be in the vernacular language or  a language as understood by the borrower.

 
2. Loan application forms would include necessary information containing information about the fees / charges payable for processing, the amount of such fees refundable in case of non acceptance of the application, pre-payment options etc, 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 the borrower can make an informed decision. The loan application form may also indicate the documents required to be submitted with the application form.
3. The Company would give acknowledgement for receipt of all loan applications.
4. The company would verify the loan applications within a reasonable period of time. If additional details/documents required, it would intimate the applicant/s borrower/s immediately thereafter.
5. The Company would convey in writing to the borrower by means of approval letter or otherwise, the amount of loan approved alongwith the terms and conditions, including the annualized rate of interest and method of application thereof.  Additionally, any penal interest to be charged will be clearly highlighted in writing to the borrower.  The Company will keep the acceptance of all these terms and conditions by the borrower in the Company’s files.
6. A copy of loan agreement along with a copy of each of all enclosures quoted in the loan agreement may be furnished to the customer if asked for.
7. The Company would give notice to all its borrowers of any change in the terms and conditions – including disbursement schedule, interest rates, service charges, prepayment charges etc. The Company would also ensure that changes in interest rates and charges are effected only prospectively. A suitable provision in this regard will be incorporated in the loan agreement.
8. Before taking a decision to recall / accelerate payment or performance under the agreement or seeking additional securities, the Company would give reasonable notice to the borrower concerned in writing.
9. The Company would release all securities on repayment of its full 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 its borrowers. If such right of set off is to be exercised, the borrower would 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.

 
10. The Company in normal course would endeavour not to interfere in the affairs of its borrowers which are not either directly or indirectly related to its extending the credit facilities unless new information, not earlier disclosed by the borrowers concerned has come to the notice of the Company.
11. In the matter of recovery of loans, the Company would not resort to any harassment – such as persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.
12. The Company would have a Grievance Redressal mechanism wherein disputes if any arising in relation to FPC would be redressed only by the board .
13. The Company would put the above Fair Practices Code outlined hereinabove on its web site, for the information of various stakeholders. The Company will also review and refine the Code, as may be required periodically – based on its own experience and fresh guidelines, if, any, to be issued by the RBI in this regard.
14. The Company would lay out appropriate internal principles and procedures in determining interest rates and processing and other charges.
15. The Company would adopt an interest rate model taking into account relevant factors such as, cost of funds, margin and risk premium, etc. 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 would be communicated explicitly in the sanction letter.
16. The rates of interest and the approach for gradation of risks would also be made available on the web-site of the company The information published in the website would be updated whenever there is a change in the rates of interest.
17. The rate of interest will be annualised rates.