Fair Practice Code

FAIR PRACTICE CODE

This has reference to Reserve Bank of India's (RBI) DNBS (PD) CC No.80/03.10.042/2005-06 dated September 28, 2006, wherein the RBI has issued Guidelines on Fair Practices Code for NBFCs and RBI's Master Circular bearing Circular RBI/2015-16/16 DNBR (PD) CC.No.054/03.10.119/2015-16 dated July 1, 2015 (Master Circular) wherein the RBI has consolidated and updated all the instructions relating to the Fair Practices Code for NBFCs. RBI has asked the Board of NBFCs to implement a Fair Practice Code based on these Guidelines. The Guidelines provide a broad framework for Fair Practice standards for the Company to follow when dealing with its customers.

The Code has been developed with the following objectives:

• Promote fair practices by setting minimum standards in dealing with customers.
• Increase transparency so that customers can have a better understanding of what type of service level can be expected from the Company.
• The Company's business would be conducted in accordance with prevailing statutory and regulatory requirements, with due focus on efficiency, customer-orientation and corporate governance principles.

The Fair Practices Code shall apply to the following categories of products and services offered by the Company.

• Secured loans to SME, Start-ups and other corporates.
• Funding for equipment loans and Constrction Finance
• The Company will continue to evaluate multiple products to meet the financing requirements of its customers. The Code will continue to apply to any product that is developed and provided by the Company to its customers.

The Fair Practices Code shall apply to the following categories of products and services offered by the Company.

• All communications to the borrower shall in the language understood and confirmed by borrowers.
• Loan application forms should 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 may indicate the documents required to be submitted with the application form.
• On receipt of loan applications, the completeness of the same and accompanying documents shall be checked and acknowledgement be issued. Such acknowledgement shall also indicate the time frame within which the application will be disposed.
• At the time of establishing initial contact with a client, a preliminary list of secondary information that the Company requires for processing the loan request will be sent.

The Fair Practices Code shall apply to the following categories of products and services offered by the Company.

• At the outset of a transaction, the Company will provide a detailed Term Sheet to customer. Each Term Sheet will contain:
  • Details of the facility, including annualized interest rates, fees charged and any other costs applicable, prepayment options etc
  • erms and conditions of sanction, including covenants and conditions that the customer is to follow
  • Necessary information required from the customer, including KYC requirements
• The Term Sheet will contain all necessary information required by the customer to meaningfully compare the Company’s terms with terms available from other financial institutions, to enable an informed decision.
• The Company will also indicate, either in the term sheet, or through a separate communication, the time frame within which the transaction is expected to be completed.
• The Company will indicate in the Term Sheet that the terms provided therein are subject to internal credit, legal and compliance.

• The Company will ensure that there is proper assessment of each credit application. The assessment will be in line with the Company's credit and investment policies and procedures.
• If the credit application meets all necessary internal credit, legal and compliance requirements, the Company will convey, in writing, the final terms of sanction to the customer through a revised Term Sheet. The revised Term Sheet will contain the amount of loan sanctioned along with the terms and conditions including annualised rate of interest.
• The Company will obtain an acceptance of the terms and conditions from the customer and keep the said acceptance on its record.
• A copy of the facility agreement / documentation, along with a copy each of all enclosures quoted in the loan agreement will be furnished to the customer at the time of execution of the said facility documentation.

• The Company will ensure timely disbursement of loans in conformity with the terms and conditions governing such loans as communicated to the customer.
• It will give notice of any change in the terms and conditions including execution schedule, interest rates, service charges, prepayment charges etc.
• It will also ensure that changes in interest rates and charges are effected only prospectively.

• The Company will carry out post-disbursement supervision in accordance with normal business practice, the signed facility documentation / Term Sheet, and the guidelines issued by the Reserve Bank of India from time to time.
• The Company will carry out any decision to recall / accelerate payment or performance under the agreement only after giving sufficient notice and in consonance with the facility documentation.
• The notice will provide full particulars about the remaining claims and the provisions under which the Company is entitled to retain the securities till the relevant claim is settled / paid.

• The Company would not cause interference in the day-to-day affairs of the customer except as provided in the terms and conditions of the facility documentation (unless new information not earlier disclosed by the customer, or the occurrence of a materially adverse event, has come to the notice of the Company).
• The Company will not discriminate on grounds of sex, caste and religion in the matter of dealing with its customers.
• In the matter of recovery of loans, the Company will adopt legally valid processes and not resort to undue harassment or use of force viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.
• In case of receipt of request for transfer of borrowal account, either from the borrower or from a bank/financial institution that proposes to take over the account, the consent or otherwise from the Company would be conveyed within 21 days from the date of receipt of request.

• The Company will designate an official (“Complaint Redressal Official”) to maintain a record of customer complaints. If a complaint is received in writing from a customer, the Complaint Redressal Official will take the complaint on record and maintain the same in a database.
• The Company will endeavor to sort out the matter within fifteen days of receipt of a complaint. This will be tracked by the Complaint Redressal Official
• In case the complaint requires more time then the same will be informed to the customer. Customer would be updated at regular intervals regarding the status of the same by the Complaint Redressal Official.
• The internal grievance redressal mechanism within the organization will ensure that complaints arising out of the action / misconduct by any functionary within the Company will be referred by the Complaint Redressal Official to the next higher level for developing solutions and disposal of the complaint
• The Complaint Redressal Official appointed by the Company is Mr. Gangadaran Chellakrishna– Director, of BANYAN VENTURES & INVESTMENT PRIVATE LIMITED.
• In case of any complaints / grievances the customer may contact the Complaint Redressal Official at the below mentioned address:
  • Attn: Gangadaran Chellakrishna, BANYAN VENTURES & INVESTMENT PRIVATE LIMITED, 20, Raja Street T Nagar Chennai Chennai TN 600017 IN, Email: krishna@banyanventures.in
• The Complaint Redressal Official may formally delegate the task of redressal of a specific complaint to a team member as suitable, with due information to the customer.

• The Company shall lay out appropriate internal principles and procedures in determining interest rates and processing and other charges.
• The Company shall 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 shall be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter.
• The rates of interest and the approach for gradation of risks shall also be made available on the web-site of the companies. The information published in the website or otherwise shall be updated whenever there is a change in the rates of interest.
• The rate of interest shall be annualized rates so that the borrower is aware of the exact rates that would be charged to the account.

Repossession clause shall be incorporated in the contract/loan agreement with the borrower which shall be legally enforceable. To ensure transparency, the terms and conditions of the contract/loan agreement shall also contain provisions regarding:

• Notice period before taking possession;
• Circumstances under which the notice period can be waived;
• 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 Procedure for sale/auction of the property

A copy of such terms and conditions shall be made available to the borrowers.

A review of compliance of the Fair Practices Code and the functioning of the grievance redressal mechanism would be done by the Management regularly and a consolidated report of such reviews will be submitted to the Board of Directors on a yearly basis. An updated copy of this code shall be put up on the Company’s website.