1. Introduction
This Fair Practices Code (“Code”) has been formulated by Whizdm Finance Private Limited (“Company”) pursuant to the Guidelines on Fair Practices Code for applicable Non- Banking Financial Companies issued by the Reserve Bank of India (RBI) and other relevant guidelines issued by the RBI from time to time. The Company shall make appropriate modifications to the Code from time to time to conform to the standards that may be prescribed by RBI from time to time.
2. Objectives
2.1. Follow good, fair and transparent business practices by setting reasonable standards in dealing with customers;
2.2. Encourage market forces, through fair competition, to achieve higher operating standards;
2.3. Relate to the customer in such manner so as to promote a fair and cordial relationship;
2.4. Conduct recovery and enforcement, where necessary, following due process of law.
3. Application
3.1. To be applicable to all persons offering the products and services of the Company or interacting with the customers as an employee or otherwise in any manner and/or by any mode.
3.2. The Code is applicable under a normal operating environment except in the event of any force majeure.
3.3. The Code is based on ethical principles of integrity and transparency and all actions and dealings shall follow the spirit of the Code.
4. Commitment
4.1. The Company shall at all times do its best to act fairly, reasonably and meet the standard practices prevalent in the industry.
4.2. The Company shall abide by all the relevant laws, regulations and meet the ethical principles of integrity and transparency during its interaction with customers.
4.3. While interacting with customers, the Company shall take all steps as may be required to provide clear information either in English or Hindi or the appropriate vernacular language regarding:
i. its various products and services;
ii. the terms and conditions, the interest rates/service charges;
iii. benefits available to customers and the implications, if any;
iv. contact persons for addressing the queries, if any;
4.4. The Company will provide a copy of this Code, at request, to the customer. The Code will also be made available on its website and at every branch / office.
4.5. The Company will not discriminate on the grounds of sex, caste and religion in the matter of lending.
4.6. The Company shall treat the information relating to customers as strictly confidential and shall not share any information, unless required under law or waived or permitted by the customer.
4.7. The Company shall take necessary steps to inform its customers of their right to information regarding their account and the facilities available to them.
4.8. The Company shall be clear and not misleading in any of its advertising and promotional materials.
4.9. The Company shall inform its customers of all financial information such as rates of interest, Annualised Percentage Rate (APR), charges, prior to entering into any transaction.
4.10. The Company shall strive to keep its customers informed in vernacular language or language as understood by the customer of any change in terms and conditions including disbursement schedule, interest rates, charges etc. through letters, email/SMS communication or any other form of general or public announcement or website displays, from time to time.
4.11. The Company shall disclose, by such mode and in such manner as deemed fit, to ensure transparency, for all information affecting the interest of the borrower including but not limited to:
i. fees/charges payable for processing the loan application;
ii. annualized rate of interest & method of application thereof
iii. Annualised Percentage Rate (APR)
iv. the amount of fee refundable, if any, if the loan amount is not sanctioned.
v. prepayment options and charges, if any;
vi. penal charges for delayed repayment, in bold, if any;
vii. conversion charges, if any (switching loan from fixed to floating rate or vice –
versa);
viii. existence of interest re-set clause, if any;
ix. any other matter which affects the interest of the borrower.
4.12. The disclosure shall be done so as to ensure that the borrowers are aware of all interest, charges and fees involved in processing and sanctioning of the loan. The Company shall not indulge in any act which is discriminatory among equals.
4.13. The Company shall ensure that changes in interest rates and charges are effective from a prospective date.
4.14. The Board of Directors of the Company shall lay out appropriate internal principles and procedures in determining interest rates and processing and other charges.
4.15. The decision to recall / accelerate payment or performance under the agreement shall be in consonance with the loan agreement.
4.16. Communication with the borrower shall be in vernacular language or in language as understood by the borrower. The loan application shall include necessary information which affects the interest of the borrower and shall indicate the documents required to be submitted with the application.
5. Loans
5.1. The Company in the normal course of its business shall endeavor at all times to guide its customers about the process and procedure to be followed for availing a loan.
5.2. Each application shall be considered independently on merit, upon scrutiny of all the information, documents required for verifying the title of the property, identity of the person and/or entity and the security to be offered, including guarantees.
5.3. The Company shall carry out due diligence on the borrower to ascertain the credit worthiness of the borrower, which will be an important parameter in making a decision on the application before sanctioning or rejecting any loan application.
5.4. The Company shall give an acknowledgement for receipt of all loan applications. The likely time frame within which loan applications will be disposed of shall also be indicated in the acknowledgement.
5.5. The Company shall update the customer on the exact due dates for repayment of a loan, frequency of repayment, breakup between principal and interest, examples of SMA/NPA classification dates, etc. shall be clearly specified in the loan agreement/KFS and the borrower shall be apprised of the same at the time of loan sanction and also at the time of subsequent changes, if any, to the sanction terms/loan agreement till full repayment of the loan.
5.6. The Company shall convey in writing to the borrower in English or any other vernacular language as understood by the borrower by means of sanction letter, loan agreement or otherwise, the amount of loan sanctioned along with the terms and conditions including annualized rate of interest and method of application thereof, APR, and other charges and keep the acceptance of these terms and conditions by the borrower on its record.
5.7. The Company shall mention the penal charges charged, if any, for late repayment in bold in the loan agreement and the Key Fact Statement (KFS), on an annualized basis. Such penal charges shall be based on the outstanding amount of the loan.
5.8. The Company shall furnish a digitally signed copy of the KFS (containing the information in the format prescribed by the RBI), summary of loan product, sanction letter, terms and conditions, account statements, and the privacy policies of the Loan Service Providers (LSPs)/Digital Lending Applications (DLAs) engaged by the Company, upon execution of loan agreement. The loan agreement as understood by the borrower shall be accompanied with a copy each of all enclosures quoted in the loan agreement.
5.9. In case of letter of guarantees executed by the guarantors, the Company shall ensure that the said letter covers their obligations, liabilities and circumstances in which they can be called upon to pay the dues of the principal customer/borrower.
5.10. In case of secured loans, if any, 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 they may have against 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.
5.11. The Company shall adopt an interest rate model taking into account relevant factors such as cost of funds, margin, risk premium and determine the rate of interest to be charged for loans and advances.
5.12. 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 and shall also be made available on the website of the Company .
5.13. Penal Charges:
· Penal charges, if charged, for non-compliance of material terms and conditions of loan contract by the borrower shall be treated as ‘penal charges’ and shall not be levied in the form of ‘penal interest’ .
· Penal Charges shall not be capitalized.
· There shall be no additional component to the interest.
· The penal charges in case of loans sanctioned to ‘individual borrowers, for purposes other than business’, shall not be higher than the penal charges to nonindividual borrowers for similar non-compliance of material terms and conditions.
· In addition to website disclosure, if any, the quantum and reason for penal charges shall be clearly disclosed to the customers in the loan agreement/KFS.
· For reminders for non-compliance of material terms and conditions of loan, penal charges and reason shall be communicated.
6. Collection of Dues
6.1. The Company shall provide the customers with all the information regarding their dues and provide reasonable time for payment of the same.
6.2. The Company shall while protecting its interest adopt reasonable and lawful measures to recover its dues from defaulting customers, including use of persuasive methods for the purpose of collection of its dues.
6.3. The Company shall ensure that the staff is adequately trained to deal with the customers in an appropriate manner.
7. General
7.1. The Company shall display on its website, the names of agents, LSPs and DLAs engaged by it to offer its products to the borrowers.
7.2. The Company shall disclose to the borrower, in KFS, the name of the relevant recovery agent appointed by the Company to ensure recovery of the loan extended to the borrower(s).
7.3. 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 information, not earlier disclosed by the borrower, has been noticed).
7.4. The Company shall not charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers.
7.5. In case of receipt of request from the borrower for transfer of borrowed account, the consent or otherwise i.e. objection of the Company, 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.
7.6. The Company shall not resort to undue harassment viz., persistently bothering the borrowers at odd hours, use muscle power for recovery of loans etc. The Company shall ensure that the staff are adequately trained to deal with the customers in an appropriate manner.
7.7. The Company shall adhere to guidelines pertaining to responsible lending conduct -release of movable/immovable property document on repayment/settlement of personal loans , once the company starts dealing in secured loan products.
7.8. The Company shall adhere to guidelines relating to reset of floating interest rate on EMIs once the company starts providing floating rate loans. At present Company is providing loans at fixed rate only.
7.9. The Company shall adhere to Guidelines on digital lending dated September 2, 2022 and any amendment thereof.
8. Repossession of products financed by the Company
8.1. The Company shall have a built-in re-possession clause in the contract/loan agreement with the borrower which shall be legally enforceable.
8.2. The terms and conditions of the contract/loan agreement shall also contain provisions regarding: (i) notice period before taking possession; (ii) circumstances under which the notice period can be waived; (iii) the procedure for taking possession of the
security; (iv) a provision regarding final chance to be given to the borrower for repayment of loan before the sale / auction of the property; (v) the procedure for giving repossession to the borrower; and (vi) the procedure for sale / auction of the property.
8.3. A copy of such terms and conditions must be made available to the borrower by furnishing a copy of loan agreement along with a copy each of all enclosures quoted in the loan agreement.
9. Complaints and Grievances
9.1. The Board of Directors of the Company has laid down a grievance redressal mechanism within the organization, which is available at https://whizdmfinance.com/grievance- redressal/.
9.2. The Company shall endeavor to address/respond to all complaints and grievances within a reasonable time and keep the customers informed about the status of their complaints.
9.3. The Company shall make available facilities at each of its branches, if any, and offices for the customers to lodge and/or submit their complaints or grievances, if any.
9.4. The Company will ensure that its grievance redressal procedure is made available on its website.
9.5. The Company shall not discriminate in extending products and facilities including loan facilities to physically / visually challenged applicants on grounds of disability. Further, the Company shall ensure redressal of grievances of persons with disabilities under the existing Grievance Redressal Mechanism provided herein.
10. Review of the Code
The Board of Directors shall conduct periodical review of the compliance of the Fair Practices Code and the functioning of the grievance redressal mechanism at various levels of management. The CCO shall periodically review the compliance of this Code and a consolidated report of such review may be submitted to the Board.