Fair Practices Code
Name of Grievance Redressal Officer:
Dr. K Natesan
FAIR PRACTICES CODE (as amended on 27th October 2017)
Pursuant to the Notification issued by the Reserve Bank of India by its Circular No.RBI/2006-07/138 DNBS (PD) CC No.80/03.10.042/2005-06 dated 28th September 2006, Sakthi Finance Limited (referred to as the “Company”) has formulated this Fair Practices Code to lay down the following procedures/practices in dealing with the business transactions and also amended the same from time to time. This Code shall come into effect on 1st November 2006.
i) Applications for loans and their processing
a) All communications to the borrower shall be in the vernacular language or a language as understood by the borrower.
b) Loan Application Forms 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. The loan application form indicates the documents required to be submitted with the application form.
c) The Company would give acknowledgment for receipt of all loan applications. The time frame within which loan applications shall be disposed of is also indicated in the acknowledgment.
ii) Loan appraisal and terms/conditions
The Company shall convey in writing to the borrower by means of sanction letter, the amount of loan sanctioned along with the terms and conditions including annualized rate of interest and method of application thereof. The Company shall keep the acceptance of these terms and conditions by the borrower on its record. The Company shall also communicate to the borrower if the loan is rejected. The Company should mention the penal interest charged for late repayment in bold in the loan agreement.
The Company should furnish a copy of the loan agreement preferably in the vernacular language or a language as understood by the borrower along with a copy each of all enclosures quoted in the loan agreement to all the borrowers upon the disbursement of loans.
iii) Disbursement of loans including changes in terms and conditions
a) The Company shall give notice to the Borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc. The Company shall ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard be incorporated in the loan agreement.
b) Decision to recall / accelerate payment or performance under the agreement shall be in consonance with the loan agreement.
c) The Company shall release all securities on repayment of all 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 the borrower. If such right of set off is to be exercised, the borrower shall 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.
a) The Company 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 new information, not earlier disclosed by the borrower, has come to the notice of the Company).
b) In case of receipt of request from the borrower for transfer of borrowal account, the consent or otherwise i.e. the Company’s objection, if any, 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.
c) In the matter of recovery of loans, consistent with its policy over the years, the company shall not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc. The Company’s staff are adequately trained (including not to behave rudely with the customers) to deal with the customers in an appropriate manner. The contract / loan agreement with the borrower shall contain the repossession clauses in line with RBI Circular No.RBI/2008-09/454 DNBS (PD) CC. No.139/03.10.001/2008-09 dated 24th April 2009.
(V) Grievances Redressal Mechanism
All disputes arising out of the decisions of branches in relation to the products and services shall be heard and disposed of within 30 days from the date of receipt of the complete details in respect of the grievance.
The following ‘Grievances Redressal Mechanism’ has been put in place.
|S.No.||Decision Level||Redressal Level|
|1.||Branch Head||Division Head|
|2.||Division Head||Regional Head|
|3.||Regional Head||Vice President (Operations)|
|4.||Vice President (Operations)||Chief Executive Officer|
In case of grievances,the borrower may contact the Grievance Redressal Officer, as detailed below:
Name of Grievance Redressal Officer:
Dr. K Natesan
The borrower can also send a written communication to the Company at the following address:
Grievance Redressal Officer (Nodal Officer)
Sakthi Finance Limited 62,
Dr. Nanjappa Road
Coimbatore – 641 018
Tamil Nadu, India
Tel: 91 (0422) 2231471-74, 4236200
In case the borrower is not satisfied with the decision of the Grievance Redressal Officer of the Company, he may approach the Officer in Charge of the Regional Office of Department of Non-Banking Supervision of RBI at the address given below:
Department of Non-Banking Supervision
Chennai Regional Office
Chennai – 600 001, India
Tel: +91 (44) 25361490
A consolidated report of periodical review of compliance of fair practices code and functioning of the grievances redressal mechanism at various levels of management may be submitted to the Board by Grievance Redressal Officer at regular intervals or as may be prescribed by the Board.
Gradation of Risks
The rate of interest specified for each loan is at monthly rests, with the corresponding annualized rate being arrived at through Sundaram Finance’s interest rate model which takes into account relevant factors such as cost of funds, margin and risk premium. We take a comprehensive approach to the gradation of risk, that does not discriminate between borrowers in the same class, but rather tailors the interest rate to each loan. The decision to give a loan and the rate of interest thereon are carefully assessed on a case by case basis based on multiple factors which may include the borrower’s cash flows (past, current and projected), borrower’s other financial commitments, the borrower’s credit record, the security for the loan as represented by underlying assets or other financial guarantees etc. Such information is gathered based on information provided by the borrower, credit reports, market intelligence and information gathered by field inspection.
Interest Rate Policy
The rate of interest charged to our customers is linked to the 3-yr regular Fixed Deposit rate offered by the Company. The mark up over this rate would vary depending on the risk profile of the customer, asset class (commercial vehicle, car, tractors, construction equipment, machinery etc.), asset type (new/used), and prevalent liquidity conditions. Accordingly, the rate of interest generally charged to our customers, for the above asset classes, is in the range of 8% to 17% p.a. payable monthly. The corresponding annualised rate of interest would be in the range of 8.3% to 18.4%.
Implementation, Effect and Review
All steps shall be taken by the nodal officer to implement this FP Code at all the offices of the Company. This revised FP Code shall come into effect from 28th March 2018 or such other date as may be decided by the Board of Directors.
The Board shall review of the FP Code, compliance of FP Code and the functioning of the Grievance redressal mechanism as and when found necessary.
The FP Code and the Interest Rate Model will be displayed on the website of the Company www.sakthifinance.com.
The FP Code with a statement about commitment to transparency and fair lending practices shall be displayed in vernacular language or in a language as understood by the borrowers at the offices and branches of the Company.
Modified and Approved by Board of Directors on 28th March 2018