Fair Practice Code

This has reference to RBI Circular no. 2012-13/416/DNBS.CC.PD No. 320/03.10.01/2012-13 dated 18th February 2013, wherein the Reserve Bank of India (RBI) has revised the guidelines on Fair Practice Code for NBFCs to implement the same. Praytana Microfinance Limited (PMFL) are committed to comply with the said fair practices as per the said directions.

At the operational level, we will display our Fair Practice Code (FPC) prominently, in vernacular language for the benefit of their customers, at our branch / places where business is transacted, and also put up on the website, for the information of various stakeholders.

On the basis of new RBI Guidelines, Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 dated 14^th March, 2022, has mentioned additional guidelines on conduct towards Microfinance Borrowers. Accordingly, PMFL has developed a Fair Practice Code (FPC) which ensures the fair, transparent and responsible conduct of the business in letter and spirit.

PMFL is governed by balanced team of learned, experienced practitioners and professionals. To bring total transparency in the working of PMFL the following ‘Code of Fair Practices’ are adopted by the Board. This FPC shall be disclosed in the language understood by the borrower.

1. All communications/documentations (loan card, fact sheet, policy etc.) to the members/ borrowers shall be in the local language or a language understood by the borrower.
2. PMFL shall provide the standard form of loan agreement for microfinance loans in a language understood by the borrower.
3. Loan application form shall include all the necessary information which affects the interest of the borrower with details of documents required.
4. All necessary documents should be collected to comply with KYC norms of RBIin respect of the borrowers.
5. All necessary details of the loan product should be provided along with terms and conditions before receiving the loan applications. The details and terms & conditions of the loan shall always be available at all the branch premises and also displayed on the website.
6. PMFL shall devise a system of giving acknowledgement for receipt of all loan applications. Preferably, the time frame within which loan applications will be disposed off, shall also be indicated in the acknowledgement.
7. All the loan applications received shall be recorded in the register maintained at the Groups/Kendra’s on the day of such applications.
8. PMFL shall disclose pricing related information to a prospective borrower in a standardized simplified factsheet. Any fees to be charged to the borrower by PMFL and/ or its partner/ agent shall be explicitly disclosed in the factsheet. The borrower shall not be charged any amount which is not explicitly mentioned in the factsheet.

1. PMFL shall train and equip all the Credit Managers/ Credit Officers/any other officer dealing with borrower to conduct proper due diligence to understand the repayment capacity of the borrower and the details of existing debt if any so that the loan sanctioned is adequate for the purpose and repayable without much strain on the part of the borrower.
2. The Loan sanctioned along with the detailed terms and conditions shall be communicated by means of a Sanction Letter in the local languageor a language understood by the borrower and obtain the consent of a borrower by getting the signature of the applicant affixed on the copy of the Sanction Letter to be maintained with the branch as a record.
3. The Loan agreementshall encompass the following details;

1. The interest rate and other charges/fees to be charged as per the Pricing policy of PMFL.
2. PMFL shall always adopt interest rate model taking into account relevant factors such as cost of funds, operational expenses, risk premium, loan loss provision & margin, as per the Pricing Policy of PMFL duly approved from Board. The rate of interest should be disclosed for different set of products through formal communications, displayed in all the office premises and website.  PMFL shall communicate the rate of interest explicitly in the sanction letter.

• PMFL shall not levy pre-payment charges to any of the borrowers and shall not stipulate any Security Deposit/ Margin for loan.

1. PMFL shall stipulate that the borrower must not be a member of more than two SHG/JLG.
2. PMFL may provide moratorium of one installmentbetween the grant of loan and due date of the first installment.
3. PMFL shall assure the privacy of borrower’s data except for sharing the same with agencies MFIN, Sa-Dhan, Credit Bureau, Regulator, Govt. Agencies, and such organizations working in the sector.

• Loan Agreement shall include the decision to recall / accelerate the repayment whenever the borrower commits a gross deviation of any of the terms and conditions of the loan giving a notice of 7 days to pay off the advance.
• PMFL shall declare accountability for any inappropriate staff behavior and timely Grievance Redressal of the borrowers. Grievance redressal channels including name and contact number of the Nodel Officer shall be available on the loan cards issued to the borrowers, as well as at all PMFL branches.

1. PMFL shall give options of repayment frequency to all customers to choose between weekly, biweekly or monthly depending on their cash flow as per Loan Repayment Policy.

While all the terms and conditions shall be provided to the borrowers by way of sanction letter and Loan Card, a copy of the Loan agreement shall also be made available to those borrowers who make specific request for the same. This decision is as a part of the ideology of “GO GREEN”, saving enormous quantity of paper.

1. PMFL disburse the loan in the bank account of the respective client only.
2. PMFL shall serve notice to borrowers in the local language or a language understood by the borrower of any change/s in terms and conditions including disbursement schedule, interest rates, other charges/fees etc. PMFL shall also effect changes in rate of interest, other charges/fees only prospectively.
3. PMFL shall organize all sanctioning and disbursement of loans to happen at the branch location and more than one official shall be involved in sanction and disbursement process. PMFL shall have close supervision of the disbursement process by the senior officials.
4. Issuance of non-credit products shall be with full consent of the borrower and fee structure for such product shall be explicitly communicated to the borrower in the loan card itself.
5. PMFL shall issue loan card containing following information which shall be in the local language or in a language understood by the borrower:

1. Borrower’s identity and the relevant information.
2. Simplified factsheet on pricing.

• All other terms and conditions attached to the loan.

1. Annualized rate of interest & all the fees, if any.
2. PMFL’s acknowledgements for all the repayments including installments received and final discharged.
3. Details of the Grievance Redressal System including the name and contact number of the nodal officer apart from Branch address and telephone number of the branch.

• The detail of non-credit products namely Health Care Cover wherever applicable and obtain the consent of the beneficiaries under the scheme and fee structure of such products

1. PMFL shall collect all the recoveries at the central designated place namely Centre Meeting/Kendra Meetings. Only in the case of borrower fails to attend at Kendra Meeting on 2 or more successive occasions and also fails to repay, our field staff shall visit to the place of residence or place work of the borrower for recovery.
2. PMFL shall ensure that a uniform systems and procedure approved by Board as a policy in the matter of staff recruitment, training and supervision. PMFL’s policy shall be to train field staff through training programs to inculcate appropriate behavior towards borrowers without adopting any abusive or coercive debt collection / recovery practices.
3. PMFL shall have a policy of appraisal of field staff, where the compliance of code of conduct and customer satisfaction shall be the parameters for appropriate compensation.
4. PMFL shall initiate necessary disciplinary action against staff who abuses any of the items under Code of conduct.
5. PMFL shall not engage/outsource any recovery agents for recovery.
6. The authorized person should not engage in following harsh methods towards recovery:

• Use of threatening or abusive language.
• Persistently calling the borrower and/or calling the borrower before 09:00 a.m. and after 06:00 p.m.
• Harassing relatives, friends, or co-workers of the borrower.
• Publishing the name of borrower.
• Use of threat of use of violence or other similar means to harm the borrower or borrower’s family /assets/reputation.
• Misleading the borrower about the extent of the debt or the consequences of non-repayment.

1. PMFL shall refrain from interference in the affairs of the borrower/ member except for the purposes provided in the terms and conditions of the loan agreement (unless the borrower/member declared/ disclosed earlier false information which comes to our notice on a later date).
2. PMFL shall oblige the request for transfer of borrower’s account on consent or otherwise i.e. objection of the PMFL, if any, should 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. PMFL shall lay down effective Grievance Redressal Mechanism by way of installing complaint boxesat all our offices and designate a senior level officer as Grievance Redressal Officer.
4. PMFL shall provide 5 days’ time to redress grievance of any member at the branch level failing which the borrower will escalate the matter through the telephone number displayed on the website to Grievance Redressal Cell at Head Office which shall resolve the grievance within 7 days.
5. We shall display our Fair Practices Code in local languages in all our office premises and on website. Also the following informative displays shall be organized at branches and website;

1. Loan products with salient features
2. Dos and don’ts for field staffs.

• Grievance Redressal Mechanism, Toll Free number and Nodal officer/ Grievance Redressal officer designation and availability of complaints box at branches.

1. Sa-dhan Code of conduct
2. PMFL shall bring out a statement in local language articulating our commitment to transparency and Fair Lending Practices and the same shall be displayed in the office premises.

6. PMFL shall provide training to all our members/ borrowers at annual interval at free of cost so as to bring about the awareness of all the changes that might have occurred during the period. PMFL shall train all the field staff to enable them to render such training to borrowers.
7. PMFL’s field staffs shall not call on the borrowers before 09 a.m. and after 06 p.m. and shall not visit their residence or work place on days of festival, marriage etc., or any mourning occasions for the purpose of recovery.
8. PMFL shall create awareness amongst the borrowers and support them by giving loans to adopt hygienic equipment like improved smokeless stove, water purifier, solar lights, sanitation, education, health care, etc. for their day-to-day requirements. PMFL shall ensure that the procedure for application of loan is not cumbersome and loan disbursements are made as per pre-determined time schedule driven through the well-defined process.
9. The details of insurance product, the terms and conditions of the policy, claim settlement, nomination, etc. shall be advised in detail in local language and necessary consent is obtained from the applicant.