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Fair Practice Code

Peerless Financial Services Ltd. (PFS) adopted a Fair Practices Code (FPC) for its lending business in 2015 pursuant to RBI directives on Non-Banking Financial Company (NBFC) Fair Practices Code (FPC) issued earlier. The RBI has issued revised NBFC FPC guidelines in September 2016. Accordingly, it is proposed to revise the Fair Practices Code of PFS on following terms representing the revised guidelines.

  Applications for loans and their processing

    All communications by PFS to the prospective borrower shall be made in vernacular language or a language understood by the borrower.

    The Loan application form of PFS shall contain necessary information to facilitate the borrower in making a meaningful comparison with the terms and conditions offered by other NBFCs and taking an informed decision based on the comparison. The form shall contain a list of documents required to be submitted by the borrower along with the duly filled up form for processing the application. Further, the terms and conditions of loan like interest rate, tenor etc. may be discussed by PFS with the borrower.

    PFS will have a mechanism of issuing acknowledgement for receipt of the duly filled up loan application along with necessary documents to the borrower. The decision of PFS regarding acceptance or rejection of application will be conveyed to the borrower within a reasonable period of time from the date of receipt of the required information from the borrower in full.

  Loan appraisal and terms & conditions

PFS will process the loan application in accordance with the Board approved Lending Policy that provides for internal credit scoring of the borrower based on risk profile and loan pricing. On sanction of loan PFS shall convey to the borrower in writing the terms of sanction of loan including amount sanctioned, annualized rate of interest and the method of its application, penal interest applicable in case of default etc. by means of sanction letter in vernacular language or a language understood by the borrower,. A copy of the sanction letter bearing acceptance of the borrower of the terms thereof will be put on record by PFS.

The loan agreement shall specify in bold the penal interest applicable in case of late payment or default by the borrower.

PFS shall at the time of sanction / disbursement furnish a copy of the loan agreement and each of the other loan documents executed to the borrower for ready reference.

  Disbursement of loans including changes in terms and conditions

PFS shall communicate any change in the terms and conditions of loan including disbursement schedule, interest rates, service charges, prepayment charges etc. through its published website/public notice or by issuing appropriate notice if specific to a borrower, in vernacular language or a language understood by the borrower.

Changes in interest rates and service charges/levies will be effected prospectively. A suitable provision in this regard shall be incorporated in the loan agreement.

Decision of PFS, if any, to recall/accelerate payment or performance under the loan agreement shall be in consonance with the agreement.

PFS shall release all securities created for the loan upon repayment of all dues by the borrower or on realisation by PFS of the outstanding amount of loan in full, subject to any legitimate right or lien for any other claim that PFS may have against the borrower. If such right of set off is to be exercised, the borrower shall be given due notice with particulars of the claim of PFS and the conditions under which PFS will be entitled to retain the securities till the relevant claim is settled/paid.

  Other general provisions

PFS shall refrain from interference in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless information not earlier disclosed by the borrower, has come to the notice of PFS). However, this does not imply that the commitment will encroach the right of PFS to recovery and enforcement of security under law, whatsoever.

In case of receipt of request from the borrower for transfer of his account, the consent or otherwise, i.e., objection of PFS, if any, shall be conveyed to the borrower within 21 days from the date of receipt of request. Such transfer shall be as per transparent contractual terms in consonance with law.

PFS shall not resort to any harassment, such as persistently bothering the borrower at odd hours, use of muscle power for recovery of loan, etc. To ensure this, the staff will be adequately trained to deal with the customers in an appropriate manner.

As a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers, PFS shall not charge foreclosure charges/prepayment penalties on floating rate term loans sanctioned to individual borrowers.

  Grievance redressal

PFS shall have an internal Grievance Redressal Cell laid down by its Board of Directors for resolving disputes arising out of the decisions of the company’s lending business functionaries. The Cell will hold meeting within a period of 2 weeks from the date of receiving any grievance intimation. The grievance will be disposed of by the Cell after hearing or, if required, be escalated to the next higher level.

The Board of Directors of PFS shall provide for periodic review of the compliance of the Fair Practices Code and the functioning of the grievance redressal mechanism at various levels of management. A consolidated report of such reviews shall be submitted to the Board at regular intervals, as may be prescribed by it. The constitution of the Cell will be as under:

Grievance Redressal Officer
Name : Mr. Partha Bose
Tel : 033-22625663
Mobile : 09830684022
E-Mail : partha.bose@peerlessfinance.in

The Grievance Redressal officer can be approached by the public for resolution of complaints against the Company. If such complaints/disputes are not redressed within a period of 1 month, the customer may appeal to the MD & CEO of PFS at ceo@peerlessfinance.in or the Officer-In-Charge of the concerned Regional Office of the Department of Non-Banking Supervision of RBI.

Grievance AgainstGrievance redressal Forum
Top Management (MD & CEO)Board
Middle Management (DGM to Sr.VP)MD & CEO

  Regulation of Interest Rate

PFS has laid down appropriate internal principles and procedures for determining interest rates and processing and other charges on loans. The principles & procedures are incorporated in the Lending Policy of the company which is approved by its Board of Directors. The policy has adopted an interest rate model taking into account relevant factors like cost of funds, margin and risk premium. The Credit Score of the borrower is computed using the model based on various parameters including the borrower’s profile, financial strength, credit history, business condition, regulatory environment affecting the business, security etc. The credit score quantifies the risk grade of the borrower. The rate of interest on loan is expressed on annualised basis so that the borrower is aware of the exact rate that will be charged to the account.

The rates of interest, the approach for gradation of risk and rationale for charging different rates of interest to different categories of borrowers shall be suitably disclosed by PFS in its loan application form and communicated in the loan sanction letter. The information will also be made available on the company’s website or published in newspaper and updated whenever there is change in the rates of interest.

  Conclusion

PFS has with due approval of its Board put the existing Fair Practice Code on its website for the benefit and information of various stakeholders. This will be replaced by the revised Code upon approval. The Code will be periodically reviewed by PFS besides upon issuance of fresh guidelines by the RBI in this regard. Due attention & weightage will be given to any suggestion for improvement or for better customer services.