1. PREAMBLE
i. This Fair Practices Code, based on “Guidelines on Fair Practices Code for SGS” issued y the Reserve Bank of India and voluntarily formulated by SGS Fintech Private Limited (SGS)(Formerly known as SGS Udyog Private Limited) hereinafter referred to as the “Company”) aims to provide to all concerned an effective overview of the practices followed by the Company in respect of the various facilities and services offered by it to its Customers, thereby enabling them to take informed decisions.
ii. It is expected that this fair practice code will act as a benchmark service standard in the dealings of the company with its customers.
iii. The code not only details the obligations that the company undertakes but also guides its staff in properly dealing with the customers.
iv. More over the code is expected to help the customers in knowing their rights and also measures they should take to protect their interests.
v. This code will be applicable to the Company after obtaining Certificate of Registration from Reserve Bank of India.
A. (i) Applications for loans and their processing
(a) All communications to the borrower will be in the vernacular language or a language as understood by the borrower.
(b) Loan application forms would 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.
(c) The SGS would devise a system of giving acknowledgement for receipt of all loan applications.
(ii) Loan appraisal and terms/conditions
The SGS would convey in writing to the borrower in the vernacular language as understood by the borrower by means of sanction letter or otherwise, the amount of loan sanctioned along with the terms and conditions including annualised rate of interest and method of application thereof and keep the acceptance of these terms and conditions by the borrower on its record. As complaints received against NBFCs generally pertain to charging of high interest / penal interest, SGS will mention the penal interest charged for late repayment in bold in the loan agreement.
It is understood that in a few cases, borrowers are not fully aware of the terms and conditions of the loans including rate of interest at the time of sanction of loans, either because the NBFC does not provide details of the same or the borrower has no time to look into detailed agreement. Not furnishing a copy of the loan agreement or enclosures quoted in the loan agreement is an unfair practice and this could lead to disputes between the NBFC and the borrower with regard to the terms and conditions. SGS will furnish a copy of the loan agreement as understood by the borrower along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.
(iii) Disbursement of loans including changes in terms and conditions
(a) The SGS would give notice to the borrower in the vernacular language or a language as understood by the borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc. SGS would also ensure that changes in interest rates and charges are affected only prospectively. A suitable condition in this regard would be incorporated in the loan agreement.
(b) Decision to recall / accelerate payment or performance under the agreement would be in consonance with the loan agreement.
(c) SGS would 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 SGS may have against borrower. If such right of set off is to be exercised, the borrower will be given notice about the same with full particulars about the remaining claims and the conditions under which SGS are entitled to retain the securities till the relevant claim is settled/paid.
(a) SGS would 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).
(b) In case of receipt of request from the borrower for transfer of account, the consent or otherwise i.e. objection of the NBFC, if any, would be conveyed within 21 days from the date of receipt of request. Such transfer will be as per transparent contractual terms in consonance with law.
(c) In the matter of recovery of loans, the SGS would not resort to undue harassment viz; persistently bothering the borrowers at odd hours, use muscle power for recovery of loans etc. As complaints from customers also include rude behavior from the staff of the companies, SGS will ensure that the staffs are adequately trained to deal with the customers in an appropriate manner.
(d) As a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers of banks and SGS, it is advised that SGS will not charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers.
(v) Responsibility of Board of Directors
The Board of Directors of SGS would also lay down the appropriate grievance redressal mechanism within the organization. Such a mechanism would ensure that all disputes arising out of the decisions of lending institutions’ functionaries are heard and disposed of at least at the next higher level. The Board of Directors would also provide for periodical review of the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of management. A consolidated report of such reviews may be submitted to the Board at regular intervals, as may be prescribed by it.
(vi) Grievance Redressal Officer
At the operational level, SGS will display the following information prominently, for the benefit of their customers, at their office place where business is transacted:
(a) the name and contact details of the Grievance Redressal Officer who can be approached by the public for resolution of complaints against the Company.
Mr. Mahesh Kumar (director)
85, New Rajdhani Enclave, Delhi-110092
Ph. No. 98110 78047, Email Id: mkgcapital@gmail.com
(b) If the complaint / dispute is not redressed within a period of one month, the customer may appeal to the Officer-in-Charge of the Regional Office of DNBS of Reserve Bank of India, New Delhi-110001, under whose jurisdiction the registered office of the Company falls.
In short, the public notice would serve the purpose of highlighting to the borrowers, the grievance redressal mechanism followed by the company, together with details of the grievance redressal officer and of the Regional Office of the RBI.
(vii) Language and mode of communicating Fair Practice Code
Fair Practices Code (which would preferably in the vernacular language or a language as understood by the borrower) based on the guidelines outlined hereinabove would be put in place by the Company with the approval of their Boards within one month from the date of issue of this circular. The company will have the freedom of re-drafting the Fair Practices Code, enhancing the scope of the guidelines but in no way sacrificing the spirit underlying the above guidelines. The same would be put up on their web-site, if any, for the information of various stakeholders.
(viii) Regulation of excessive interest charged by SGS
(a) The Board will adopt an interest rate model taking into account relevant factors such as cost of funds, margin and risk premium 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 will be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter.
(b) The rate of interest would be annualized rate so that the borrower is aware of the exact rates that would be charged to the account.
As the primary responsibility for compliance with the Directions rests with the Company they will make necessary organizational arrangements to assign responsibility for compliance to designated individuals within the company and establish systems of internal control including audit and periodic inspection to ensure the same.
(x) Complaints about excessive interest charged by SGS
The Reserve Bank has been receiving several complaints regarding levying of excessive interest and charges on certain loans and advances by SGS. Though interest rates are not regulated by the Bank, rates of interest beyond a certain level may be seen to be excessive and can neither be sustainable nor be conforming to normal financial practice. Boards of SGS are, therefore, advised to lay out appropriate internal principles and procedures in determining interest rates and processing and other charges. In this regard the guidelines indicated in the Fair Practices Code about transparency in respect of terms and conditions of the loans are to be kept in view.
(xi) Release of Movable / Immovable Property Documents on Repayment/ Settlement of Personal Loans
The Company shall release all the original movable / immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/ settlement of the loan account.
The timeline and place of return of original movable / immovable property documents will be mentioned in the loan sanction letters issued on or after the effective date.
In order to address the contingent event of demise of the sole borrower or joint borrowers, the Company shall have a well laid out procedure for return of original movable / immovable property documents to the legal heirs. Such procedure shall be displayed on the website of the Company along with other similar policies and procedures for customer information.
(xii) Clarification regarding asking for the earlier repayment of loan financed by SGS
SGS must have a built in clause regarding demand of loan before maturity period. Company may ask for re payment of loan amount prior to due date in case of urgency of fund in company after giving prior notice of one month.