FAIR PRACTICE CODE

 
 

 


SML FINANCE LIMITED

FAIR PRACTICES CODE

FAIR PRACTICES CODE REVISED AND APPROVED IN THE MEETING OF THE BOARD OF DIRECTORS OF SML FINANCE LIMITED HELD ON 13.06.2014.

The Chairman presented the Circular No. DNBS. PD. CC. No. 340 / 03.10.042 / 2013-14 dated 01.07.2013 issued by the Reserve Bank of India to the NBFC. After discussion the following guidelines to be followed in all Business Loan transactions were adopted in modification of earlier decisions in this regard.

Guidelines:

  1. APPLICATION FOR BUSINESS LOANS AND THEIR PROCESSING :

    1. All communications to the borrower shall be in vernacular language or in a language understood by the borrower.

    2. All loan application forms should include all the necessary information which affects the interest of the borrower.

    3. Documents to be attached with the application:

      1. Name And complete address of the borrower
      2. Details of security offered
      3. Details of source of income
      4. Identity Proof (ie. Election ID Card, Ration Card etc…)
      5. Sufficient post dated cheques to serve the future instalments.


    4. Immediately on receipt of application for business loans, it should be verified to ensure that the application form is duly filled in and signed, and that the required enclosures are attached and that all the KYC norms are complied with. On receipt of the application, acknowledgements should be issued to the applicant in the format to be given by Head Office. The time frame within which the loan applications will be disposed of should be indicated in the acknowledgement.


  2. LOAN APPRAISAL AND TERMS AND CONDITIONS :

    1. All business loan applications must be processed by more than one individual. All business loan application should be processed within five days by the Sanctioning authority and the decision regarding the loan application should be intimated to the applicant.

    2. Adequate due diligence should be carried out on the borrower before extending any loan. The existing debts of the borrowers should be analysed before sanctioning of the loan. The approval of the loan shall be intimated to the borrower by means of Loan Sanction letter/agreement prepared in vernacular language or in a language understood by the borrower. Loan Sanction letter/agreement should contain the Amount of loan sanctioned, Annual rate of interest, Method of application of interest, Gradation of risk and the rationale for charging different rates of interest to different categories of borrowers, Other charges & levies etc applicable, Number of monthly installments, Amount of each installment, Rights and duties of the borrowers, The procedure for taking possession of the security, Provision regarding final chance to be given to the borrower for repayment of loan before the sale/auction of the property, Procedure for giving repossession to the borrower, and the procedure for sale/auction of the property. The acceptance of the terms and conditions mentioned in the sanction letter by the borrower should be obtained and kept in record.

    3. The rate of penal interest charged in the event of late repayment / non repayment of loan should be indicated in bold letters in the loan agreement.

    4. A copy of the loan agreement prepared in vernacular language or in a language understood by the borrower along with a copy each of all the enclosures mentioned in the loan agreement shall be given to all the borrowers at the time of sanction / disbursement of loans.

    5. Interest on Business loan – varies from 18% to 30%

    6. Approach for Gradation of Risk :-

      1. General :-

      2. The rate of interest is arrived based on the weighted average cost of funds, multiple risk parameters such as borrower profile, repayment capacity, type of asset, administrative cost etc. The decision to facilitate a proposal for loan and the interest rates are applicable on a case to case basis.


      3. Security :-

      4. For the loan as represented by the underlying assets, information like loan to value ratio, mode of payment, period of loan, location of the borrower, end use of the asset etc are collected based on the borrower inputs, credit bureau and field inspection by the company officials. The Interest rates are subject to change as the situation warrants and are subject to management decision based on the merit of individual cases.


  3. DISBURSEMENT OF LOANS AND CHANGES IN TERMS AND CONDITIONS :

    1. Company shall by way of notice prepared in vernacular language or in a language understood by the borrower give advance information to the borrowers regarding any changes in terms and conditions of the business loans viz; changes in disbursement schedule, changes in interest rates, service charges, prepayment charges etc and a copy of the same duly acknowledged by the borrower shall be kept in record.

    2. It should be mentioned in the loan agreement that the rate of interest will be revised only prospectively and not retrospectively.

    3. Decision to recall / accelerate payment or performance of the loan will be only in consonance with the loan agreement.

    4. Every borrower is entitled to receive back all securities offered for the loan availed on repayment of all dues and on full settlement of the loan. However if the borrower has any other liability with the Company, the Company reserves the right not to release any securities. In such a case, the Company should give notice to the borrower about the same stating the full particulars of the remaining claims and the conditions under which the Company is entitled to retain the securities till the relevant claim is settled/paid.


  4. GENERAL :

    1. The Company will not interfere in the affairs of the borrower except for the purposes provided in the loan agreement unless such circumstances arise which may result in the breach of the contract.

    2. The Company will not resort to any undue harassment of the borrower for the recovery of loans.

    3. All business loans should be sanctioned and disbursed only from the central location.

    4. Non-coercive method of recovery has to be adopted. Field staff shall be allowed to make recovery at residence of the borrower only if the borrower fails to appear at the central designated place on 2 or more occasions. The Company shall ensure that all the staffs are adequately trained to deal with the customers in an appropriate manner.

    5. Internal auditors of the Company should conduct regular and periodic inspection to ensure that the system and procedures are strictly adhered to and that all the required documents are attached with the Loan sanction letter/agreement. The Individuals designated for compliance of various systems, procedures and internal control including audit and periodic inspection will be held responsible for the violations / non compliance.

    6. Assignment of duties, job rotation, separation of duties of mobilization, execution and approval that are adopted by the Board of Directors from time to time for the smooth operation and functioning of the system will be binding on all employees of the Company.

    7. The Fair Practice code should be displayed at the Registered office and Branch offices of the Company.


  5. REDRESSAL MECHANISM :

    1. The Contact Names and Contact numbers of the officials of the grievance redressal cell should be prominently displayed at the Registered office and the Branch offices on the Company.

    2. Department Managers have to periodically review the functioning of the grievance redressal mechanism and the compliance of the Fair Practices Code and submit their report to the Board of Directors.


FAIR PRACTICES CODE

FAIR PRACTICES CODE REVISED AND APPROVED IN THE MEETING OF THE BOARD OF DIRECTORS OF SML FINANCE LIMITED HELD ON 13.06.2014.

The Chairman presented the Circular No. DNBS. PD.CC. No. 340 / 03.10.042 / 2013-14 dated 01.07.2013 issued by the Reserve Bank of India to the NBFC. After discussion the following guidelines to be followed in all Gold Loan transactions were adopted in modification of earlier decisions in this regard.

Guidelines

  1. APPLICATION FOR GOLD LOANS AND THEIR PROCESSING :

    1. All communications to the borrower shall be in vernacular language or in a language understood by the borrower.

    2. KYC guidelines stipulated by RBI should be strictly complied with and adequate due diligence should be carried out on the borrower before extending any loan. The Borrower cannot be a member of more than one SHG/JCG.

    3. All loan application forms should include all the necessary information which affects the interest of the borrower. All loan applications should include the following information :
      1. The Complete Name & address of the borrower with telephone numbers and landmarks.
      2. Description of the gold pledged and Gross weight and net weight of each item.
      3. Identity proof & Address proof (Passport, Voters ID card, Driving license, Ration card etc) of the borrower should be attached with the application.


    4. Immediately on receipt of application for gold loan, it should be verified to ensure that the application form is duly filled in and signed, and that the required enclosures are attached. All Gold loan applications must be processed by more than one individual


  2. LOAN APPRAISAL AND TERMS AND CONDITIONS :

    1. All gold loan application should be immediately processed and the gold pledged as security should be properly appraised for its purity, by a Company approved appraiser before extending the loan. Existing debts of the borrowers should be analysed before sanctioning of the loan.

    2. The loan facility should be extended strictly to the genuine owner of the gold pledged only and should not be extended to any other person.

    3. Loan agreement should be prepared in vernacular language or in a language understood by the borrower. Loan agreement should contain the Amount of loan sanctioned, Annual rate of interest, Other charges & levies, Description of the gold pledged, Gross weight and net weight of each item, Procedure regarding the auction of gold pledged and all other terms & conditions of the loan sanctioned. The acceptance of the terms and conditions mentioned in the loan agreement by the borrower should be obtained and kept in record.

    4. The rate of penal interest charged in the event of late repayment / non repayment of loan should be indicated in bold letters in the loan agreement.

    5. Interest on Gold loan – Varies from 10% to 26%

    6. Approach for Gradation of Risk :-


      1. General :-


        The rate of interest is arrived based on the weighted average cost of funds, multiple risk parameters such as borrower profile, repayment capacity, type of asset, administrative cost etc. The decision to facilitate a proposal for loan and the interest rates are applicable on a case to case basis.


      2. Security :-

      3. For the loan as represented by the underlying assets, information like loan to value ratio, mode of payment, period of loan, location of the borrower, end use of the asset etc are collected based on the borrower inputs, credit bureau and field inspection by the company officials. The Interest rates are subject to change as the situation warrants and are subject to management decision based on the merit of individual cases.


  3. DISBURSEMENT OF LOANS INCLUDING CHANGES IN TERMS AND CONDITIONS :

    1. On disbursement of the loan, pawn tickets should be prepared in duplicate and one copy has to be issued to the borrower and the duplicate copy should be retained in the office after obtaining the signature of the borrower.

    2. Any change in the terms and conditions of the agreement should be intimated to the borrower in vernacular language or in a language understood by the borrower and a copy of the same duly acknowledged by the borrower should be kept on record.

    3. It should be mentioned in the loan agreement that the rate of interest and other terms will be revised only prospectively and not retrospectively.

    4. Decision to recall / accelerate payment or performance of the loan will be only in consonance with the loan agreement.

    5. Every borrower is entitled to receive back all the gold pledged as security for the loan availed on repayment of all dues and on full settlement of the loan. However if the borrower has any other liability with the Company, the company reserves the right not to release the gold pledged. In such a case, the Company should give notice to the borrower about the same stating the full particulars of the remaining claims and the conditions under which the Company is entitled to retain the gold pledged till the relevant claim is settled/paid.


  4. GENERAL :

    1. The Company will not interfere in the affairs of the borrower except for the purposes provided in the loan agreement unless such circumstances arise which may result in the breach of the contract.

    2. All branches should ensure that they have sufficient infrastructure to store the pledged gold in safe custody and must from time to time review and upgrade their infrastructure and ensure that all the staff in gold loan section are properly trained to deal with the customers in an appropriate manner.

    3. The gold accepted as collateral should be appropriately and sufficiently insured.

    4. All gold loans should be sanctioned and disbursed only from the central location.

    5. Proper sanction has to obtained from the concerned authorities before financing against the gold pledged. The Finance value, LTV, Rate on interest, Period of loan and such other matters relating to gold loan shall be decided by the Board of Directors or by any authority duly authorized by the Board of Directors in this behalf. Such Decisions taken in this manner, should be intimated to the branches immediately for implementation and any violation in this regard will be viewed seriously.

    6. Non-coercive method of recovery has to be adopted. Field staff shall be allowed to make recovery at residence of the borrower only if the borrower fails to appear at the central designated place on 2 or more occasions.

    7. Internal auditors of the Company should conduct regular inspection to ensure that the procedures are strictly adhered to and that the loans are extended to genuine owners only. The Individuals designated for compliance of various systems, procedures and internal control including audit and periodic inspection will be held responsible for the violations / non compliance.

    8. The gold pledged can be auctioned in the event of non repayment provided it should be in accordance with the auction policy approved by the Board of Directors of the Company.

    9. Assignment of duties, job rotation, separation of duties of mobilization, execution and approval that are adopted by the Board of Directors from time to time for the smooth operation and functioning of the system will be binding on all employees of the Company.

    10. The Fair Practice code should be displayed at the Registered office and Branch offices of the Company.


  5. AUCTION POLICY :

    1. A minimum of 30 days prior notice shall be given to the borrower before auction.

    2. The notice must be sent by registered post with acknowledgement and if the acknowledgement is not received within a normal period a second notice should be sent to the borrower in the same manner.

    3. The auction should be announced to the public by issue of advertisement in at least two newspapers, one in vernacular language and another in national daily newspaper.

    4. Maximum publicity must be given to the auction. A notice stating the details of auction must be published in the notice board of the Company.

    5. The Company and any of the sister concerns of the Company should not participate in the auction held. Any staff of the Company or of the sister concerns of the Company should not participate in the auction held.

    6. The pledged gold should be auctioned only through auctioneers approved by the Board of Directors.

    7. The auction sale should be conducted in accordance with the rules and regulations prescribed by Reserve Bank of India from time to time.


  6. REDRESSAL MECHANISM :

    1. The Contact Names and Contact numbers of the officials of the grievance redressal cell should be prominently displayed at the Registered office and the Branch offices on the Company.

    2. Department Managers have to periodically review the functioning of the grievance redressal mechanism and the compliance of the Fair Practices Code and submit their report to the Board of Directors.


SML FINANCE LIMITED

FAIR PRACTICES CODE

FAIR PRACTICE CODE REVISED AND APPROVED IN THE MEETING OF THE BOARD OF DIRECTORS OF SML FINANCE LIMITED HELD ON 14.02.2017.

The Chairman presented the Circular No. DNBS. PD. CC. No. 340 / 03.10.042 / 2013-14 dated 01.07.2013 issued by the Reserve Bank of India to the NBFC. After discussion the following guidelines to be followed in all Hire Purchase transactions were adopted in modification of earlier decisions in this regard.

Guidelines:

  1. APPLICATION FOR HIRE PURCHASE LOANS AND THEIR PROCESSING :
    1. All communications to the borrower shall be in vernacular language or in a language understood by the borrower.
    2. All loan application forms should include all the necessary information which affects the interest of the borrower. All loan applications should include the following information:
      1. Rate of Hire Charges:
        1. For new vehicles
        2. For second hand vehicles
      2. Documents to be attached with the application :
        1. Copy of RC Book and Valuation report (Second hand vehicle)
        2. Details of additional security, if any
        3. Details of source of income
        4. Identity Proof (ie. Election ID Card, Ration Card etc…)
        5. Sufficient post dated cheques to serve the future installments.
    3. Immediately on receipt of application for hire purchase finance, it should be verified to ensure that the application form is duly filled in and signed, and that the required enclosures are attached and that all the KYC norms stipulated by RBI are complied with. On receipt of the application, acknowledgements should be issued to the applicant in the format to be given by Head Office. The time frame within which the loan applications will be disposed of should be indicated in the acknowledgement.
  2. LOAN APPRAISAL AND TERMS AND CONDITIONS:

    1. All hire purchase loan applications must be processed by more than one individual. All hire purchase loan application should be processed within five days by the Sanctioning authority and the decision regarding the loan application should be intimated to the applicant.

    2. Adequate due diligence should be carried out on the borrower before extending any loan. The existing debts of the borrowers should be analysed before sanctioning of the loan. The approval of the loan shall be intimated to the borrower by means of Loan Sanction letter/agreement prepared in vernacular language or in a language understood by the borrower. Loan Sanction letter/agreement should contain the Amount of loan sanctioned, Annual rate of interest, Method of application of interest, Gradation of risk and the rationale for charging different rates of interest to different categories of borrowers, Other charges & levies etc applicable, Number of monthly installments, Amount of each installment, Facilities for daily collection, Insurance coverage requirement , Rights and duties of the borrowers, Notice period before taking possession in case of default, Circumstances under which the notice period can be waived, The procedure for taking possession of the security, Provision regarding final chance to be given to the borrower for repayment of loan before the sale/auction of the property, Procedure for giving repossession to the borrower, and the procedure for sale/auction of the property. The acceptance of the terms and conditions mentioned in the sanction letter by the borrower should be obtained and kept in record.

    3. The rate of penal interest charged in the event of late repayment / non repayment of loan should be indicated in bold letters in the loan agreement.

    4. A copy of the loan agreement prepared in vernacular language or in a language understood by the borrower along with a copy each of all the enclosures mentioned in the loan agreement shall be given to all the borrowers at the time of sanction / disbursement of loans.

    5. Interest on Hire Purchase Loans – Varies from 9% to 27% IRR

    6. Penal charges :
      1. Default Charges :
      2. These Charges are charged only if the borrower fails to make payment on due dates.

        SL.No

        Vehicle Segment

        Charges

        1

        Two Wheeler

        Rs.100/- per EMI

        2

        Three Wheeler

        Rs.150/- per EMI

        3

        Four Wheeler

        Rs.250/- per EMI

        4

        Six Wheeler

        Rs.400/- per EMI

      3. Recovery Charges :
      4. These charges will be levied from the actual due date of the second installment of defaulted accounts, when the borrower fails to honor his commitment (PTP) given, either to our field executive or to our call center executive.

      5. Late Payment Charges :
      6. Borrower will be charged additional Finance Charge / Overdue Interest @ 3% per month on Amount outstanding for the period it is outstanding.

      7. Foreclosure charges :
      8. SL.No

        Vehicle Segment

        Charges

        1

        Within 12 Months from the date of disbursement

        5% + Service tax on Principal Outstanding for the remaining period

        2

        After 12 Months from the date of disbursement

        3% + Service tax on Principal Outstanding for the remaining period

      9. Other Charges :
      10. SL No.

        Particulars of Charges

        Amount

        1

        Statement of Account charges

        Rs.500/-

        2

        Duplicate NOC charges

        Rs.500/-

        3

        Valuation charges

        Actual charges incurred

        4

        Postage & Stamp charges

        Actual charges incurred

        5

        Repossession charges

        Actual charges incurred

        6

        Legal charges

        Actual charges incurred

        7

        NOC to convert Commercial to Private registration

        Rs.500/-

        8

        NOC to convert Private to Commercial registration

        Rs.500/-

        9

        Loan cancellation / restructuring

        Rs.2000/-

    7. Important Terms and Conditions :
    8. In case of Hire purchase loans, Lien will be marked in the RC Book. On closure of the loan the lien releasing letter will be issued to the borrower. Insurance charges have to be borne by the borrower during the loan period.

    9. Approach for Gradation of Risk :
      1. General :
      2. The rate of interest is arrived based on the weighted average cost of funds, multiple risk parameters such as borrower profile, repayment capacity, type of asset, administrative cost etc. The decision to facilitate a proposal for loan and the interest rates are applicable on a case to case basis.

      3. Security :
      4. For the loan as represented by the underlying assets, informations like loan to value ratio, mode of payment, period of loan, location of the borrower, end use of the asset etc are collected based on the borrower inputs, credit bureau and field inspection by the company officials. The Interest rates are subject to change as the situation warrants and are subject to management decision based on the merit of individual cases.

    10. DISBURSEMENT OF LOANS INCLUDING CHANGES IN TERMS AND CONDITIONS :

      1. Company shall by way of notice prepared in vernacular language or in a language understood by the borrower give advance information to the borrowers regarding any changes in terms and conditions of the hire purchase agreement viz; changes in disbursement schedule, changes in interest rates, service charges, prepayment charges etc and a copy of the same duly acknowledged by the borrower shall be kept in record.

      2. It should be mentioned in the loan agreement that the rate of interest or finance charges will be revised only prospectively and not retrospectively.

      3. Decision to recall / accelerate payment or performance of the loan will be only in consonance with the loan agreement.

      4. Every borrower is entitled to receive back all securities offered for the loan availed on repayment of all dues and on full settlement of the loan. However if the borrower has any other liability with the Company, the Company reserves the right not to release any securities. In such a case, the Company should give notice to the borrower about the same stating the full particulars of the remaining claims and the conditions under which the Company is entitled to retain the securities till the relevant claim is settled/paid.
    11. GENERAL :

      1. The Company will not interfere in the affairs of the borrower except for the purposes provided in the loan agreement unless such circumstances arise which may result in the breach of the contract.

      2. In case of any request for transfer of loan account, the decision of the Company shall be conveyed within 21 days from the date of receipt of request. Such transfer shall be as per transparent contractual terms in consonance with law.

      3. The Company will not resort to any undue harassment of the borrower for the recovery of loans. However the Company reserves its right to repossess the assets financed as per the terms of the contract and in consonance with the law.

      4. All hire purchase loans should be sanctioned and disbursed only from the central location.

      5. Non-coercive method of recovery has to be adopted. Field staff shall be allowed to make recovery at residence of the borrower only if the borrower fails to appear at the central designated place on 2 or more occasions. The Company shall ensure that all the staffs are adequately trained to deal with the customers in an appropriate manner.

      6. Internal auditors of the Company should conduct regular and periodic inspection to ensure that the system and procedures are strictly adhered to and that all the required documents are attached with the Loan sanction letter/agreement. The Individuals designated for compliance of various systems, procedures and internal control including audit and periodic inspection will be held responsible for the violations / non compliance.

      7. Assignment of duties, job rotation, separation of duties of mobilization, execution and approval that are adopted by the Board of Directors from time to time for the smooth operation and functioning of the system will be binding on all employees of the Company.

      8. The Fair Practice code should be displayed at the Registered office and Branch offices of the Company.
  3. GRIEVANCE REDRESSAL MECHANISM:

    1. The Contact Names and Contact numbers of the officials of the grievance redressal cell should be prominently displayed at the Registered office and the Branch offices on the Company.

    2. Department Managers have to periodically review the functioning of the grievance redressal mechanism and the compliance of the Fair Practices Code and submit their report to the Board of Directors.

    3. Customers who wish to provide feedback or send in their complaint may approach the following officer between 10:00 AM and 5:00 PM, from Monday to Friday (except on national holidays).

      Mr. Shajan A D
      Associate Vice President
      SML Finance Limited,
      Regd. Office:- Bethany Complex,
      Thrissur road, Kunnamkulam.
      Mobile No: +91 8589014426

      If the complaint/dispute is not redressed within a period of one month, the customer may appeal to Officer-in-Charge of the Regional Office of Department of Non-Banking Supervision of RBI under whose jurisdiction the Registered Office of the Company falls. The detail of DNBS is as given below:-

      The General Manager,
      Reserve Bank of India,
      Department of Non-Banking Supervision
      Bakery Junction, Thiruvananthapuram
      Phone No: 0471 2338818