Mahindra & Mahindra Financial Services Limited (“the Company” or “MMFSL”), a Non-Banking Finance Deposit Taking Company registered with Reserve Bank of India (“RBI”) is presently in the business of providing different types of loans which includes Vehicle Loans, Equipment Finance, SME Loans, Consumer Durable Loans, Personal Loans, etc., to its various customers. Such credit facilities are extended to different types of customers, which include Individuals, Sole Proprietary concerns, Partnership Firms, Companies and other Legal entities.
Fair Practice Code (“the Code”) sets out the principles for fair practices/ standards while dealing with its customers. The Code will facilitate the customers to take informed decisions in respect of the financial facilities and services to be availed by them and will apply to any loan that the Company may sanction and disburse.
The Code applies to all categories of products and services offered by the Company (currently offered and which may be introduced in future).
Objective of the Code
This Code has been developed to:
- promote good, fair and trustworthy practices by setting minimum standards in dealing with the customers
- increase transparency to enable the customers to have a better understanding of what they can reasonably expect of the services
- promote a fair and cordial relationship between the customers and the Company.
Act efficiently, fairly and diligently in our dealings with all our customers by:
- Meeting the commitments and standards specified in the Code for the products and services which the Company offers and in the procedures and practices its staff follows;
- Making sure that Company's products and services meet relevant laws and regulations;
- Providing professional, courteous and speedy services;
- Providing accurate and timely disclosure of terms and conditions, costs, rights and liabilities as regards financial transactions.
Help customers understand how company's product work by:
- Explaining their financial implications
Deal quickly and sympathetically with things that go wrong by:
- Correcting mistakes;
- Handling customer's complaints;
- Telling customers' how to take their complaint forward if they are still not satisfied
Not to discriminate the borrower on the basis of religion, caste, sex, descent or any of them.
Application for Loan & their processing
- The Company shall have a loan application form in physical/ digital mode for all the products offered to its customers depending upon the nature of the product. Loan application forms would include necessary information of the customers, features of the product and the documents required to be submitted for loan processing.
- Customers who have evinced interest in availing the loan from MMFSL should fill up the loan application form, complete in all aspects and should submit the same to the Company, duly signed.
- The Company will have a system of giving acknowledgement for receipt of loan applications either through physical mode or digital mode like SMS, Email Id, etc. The time frame within which loan applications will be disposed of will be indicated in the acknowledgement.
- The Loan Application Form shall be in a vernacular language or language as understood by the customer.
Loan Appraisal and Terms & Conditions
- The Company will consider all the documents submitted and the information provided, verify the creditworthiness of the customer and evaluate the proposal at its sole discretion. In case any additional information or documents are required the company will convey the same to the customer within a reasonable time.
- After necessary assessment, the Company will convey in writing in physical/digital mode to the borrower, in vernacular language of language as understood by the borrower, by means of an offer letter or any other mode, the amount of loan approved along with the terms and conditions, including the annualised rate of interest thereof. It would keep the acceptance of these terms and conditions by the borrower on the Company’s files in digital (including OTP based) or physical mode as applicable.
- The Company will mention the penal interest charged for late repayment in bold in the loan agreement.
- The Company will furnish a copy of the loan agreement 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.
Disbursement of Loans, including changes in terms & conditions
- Any change in terms of Conditions like change in interest rate, tenure, all charges/fees would be communicated to the borrower in writing in the vernacular language or a language as understood by the borrower. Any changes in interest rates and charges will be effective only prospectively.
- Any decision to recall, accelerate payment would be communicated to the borrower in writing as per the terms of the agreement.
- No Due Certificate shall be issued on recovery of all dues. Collateral, if any, will be released along with the No Due Certificate. Any collateral taken to guarantee the performance of contract will be duly acknowledged and kept in safe custody.
- All communications to the borrower shall be in vernacular language or in a language as understood by the borrower.
- The Company will take recourse / actions only through legally permissible remedies as per the terms & conditions of loan agreement entered into with the borrower.
- 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).
- In case of receipt of request from the borrower for transfer of borrowal 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.
- Any agency to whom various activities are outsourced/entrusted will have to be short listed and empanelled as per the company policies issued from time to time.
- The Company has an exclusive recovery team who are specialized in handling collection activity in a professional manner by adopting a due legal process as per the law of the land. Since it is a specialized function, the quality is addressed at the recruitment level itself.
- In the matter of recovery of loans, the Company shall not resort to any harassment – such as persistently bothering the borrowers at odd hours (before 8:00 a.m. and after 7:00 p.m.), use of muscle power for recovery of loans, etc. Further, the employee/agents will be adequately trained to deal with the customers in an appropriate manner.
- The Company has adopted an interest rate model taking into account relevant factors such as, cost of funds, margin and risk premium, etc. to determine the rate of interest to be charged for loans and advances and ensuring that the interest rate is not excessive. The Company shall, at the time of disbursal, ensure that the interest rate on loan and advances are in strict adherence to the interest rate model adopted by the Company. 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 in Application Form, Offer letter and on the website of the Company.
- The Company will not charge foreclosure charges/ pre-payment penalties on any floating rate term loan sanctioned for purposes other than business to individual borrowers, with or without co-obligant(s).
Grievance Redressal Mechanism
The Company has laid down an appropriate grievance redressal mechanism within the organization to resolve disputes arising in this regard.:
The Company shall display the following information prominently, for the benefit of its customers, at its branches / places where business is transacted:
- The name and contact details (Telephone / Mobile no. and email address) of the Grievance Redressal Officer/ Principal Nodal Officer who can be approached by the public for resolution of complaints against the Company.
- Reserve Bank - Integrated Ombudsman Scheme, 2021 (‘Scheme’)
- Salient features of the Scheme in English, Hindi and the regional language
- If the complaint / dispute is not redressed within a period of one month, the customer may appeal to the Reserve Bank of India through the complaint lodging portal: https://cms.rbi.org.in.
Appointment of Principal Nodal Officer
The Company has appointed Principal Nodal Officer in accordance with the directions provided under the Reserve Bank – Integrated Ombudsman Scheme, 2021.
Appointment of Internal Ombudsman
The Company has appointed the Internal Ombudsman under the RBI circular on ‘Appointment of Internal Ombudsman by Non-Banking Financial Companies’ dated November 15, 2021.
Repossession of vehicles
The Company has a built-in re-possession clause in the contract/ loan agreement with the borrower which is legally enforceable. To ensure transparency, the terms and conditions of the contract/ loan agreement contains provisions regarding:
- notice period before taking possession;
- circumstances under which the notice period can be waived;
- the procedure for taking possession of the security
- a provision regarding final chance to be given to the borrower for repayment of loan before the sale/ auction of the property;
- the procedure for giving repossession to the borrower; and
- the procedure for sale/ auction of the property.
A copy of such terms and conditions is made available to the borrower in the Loan Agreement executed between the Company and the borrower.
Loans Sourced by the Company through Digital Lending:
The Company will, irrespective of whether they lend through their own digital lending platform or through an outsourced lending platform, adhere to this Fair Practices Code.
RBI vide its circular dated September 2, 2022, has issued “Guidelines on Digital Lending” (“RBI Guidelines”). As per RBI Guidelines, the Company will make following disclosure to borrowers or all digital lending products of the Company:
- Annual Percentage Rate (APR) will be disclosed as a part of the Key Fact Statement (KFS).
- The Company will provide a KFS to the borrower before the execution of the contract. Any fees, charges, etc., which are not mentioned in the KFS will not be charged by the Company to the borrower at any stage during the term of the loan.
- The Company will ensure that digitally signed documents will automatically flow to the borrowers on their registered and verified email/ SMS upon execution of the loan contract/ transactions.
- The Company will prominently publish the list of their Digital Lending Apps/ Platforms (DLAs), Lender Service Provider (LSP) and DLAs of LSPs with the details of the activities for which they have been engaged, on its website.
- The Company will ensure that its DLAs or DLAs of its LSPs at on-boarding/sign-up stage, prominently display information relating to the product features, loan limit and cost, etc., so as to make the borrowers aware of these aspects.
- The Company will communicate to the borrower, at the time of sanctioning of the loan and also at the time of passing on the recovery responsibilities to an LSP or change in the LSP responsible for recovery, the details of the LSP acting as recovery agent who is authorised to approach the borrower for recovery.
- The Company will ensure that DLAs of the Company and LSPs have links to Company’s website where further/ detailed information about the loan products, the lender, the LSP, particulars of customer care, link to Sachet Portal, privacy policies, etc. is available.
- The Company will ensure that it and its LSPs have a suitable nodal grievance redressal officer to deal with FinTech/ digital lending related complaints/ issues raised by the borrowers.