4.1 (i) Applications for loans and their processing
- 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 SHFCL can be made and informed decision can be taken by the borrower. The loan application form may indicate the list of documents required to be submitted with the application form.
- The SHFCL should devise a system of giving acknowledgement for receipt of all loan applications. Preferably, the time frame within which loan applications will be disposed of should also be indicated in the acknowledgement.
(ii) Loan appraisal and terms/conditions
- Normally all particulars required for processing the loan application shall be collected by the SHFCL at the time of application. In case it needs any additional information, the customer should be told that he would be contacted immediately again.
- The SHFCL should convey in writing to the borrower by means of sanction letter or otherwise, the amount of loan sanctioned along with all terms and conditions including annualized rate of interest, method of application, EMI Structure, prepayment charges and keep the written acceptance of these terms and conditions by the borrower on its record.
- SHFCL shall invariably furnish a copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement to every borrower at the time of sanction / disbursement of loans.
(iii) Communication of rejection of Loan Application
- If an SHFCL cannot provide the loan to the customer, it shall communicate in writing the reason(s) for rejection.
(iv) Disbursement of loans including changes in terms and conditions
- Disbursement should be made in accordance with the disbursement schedule given in the Loan Agreement/ Sanction Letter.
- The SHFCL should give notice to the borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges, other applicable fee/ charges etc. SHFCL should also ensure that changes in interest rates and charges are affected only prospectively. A suitable condition in this regard should be incorporated in the loan agreement.
- Decision to recall / accelerate payment or performance under the agreement or seeking additional securities, should be in consonance with the loan agreement.
- SHFCL should 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 SHFCL 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 SHFCL are entitled to retain the securities till the relevant claim is settled /paid.
When a person is considering being a guarantor to a loan, he/she should be informed about
- his/her liability as guarantor;
- the amount of liability he/she will be committing him/herself to the company;
- circumstances in which SHFCL will call on him/her to pay up his/her liability;
- whether SHFCL has recourse to his/her other monies in the company if he/she fail to pay up as a guarantor;
- whether his/her liabilities as a guarantor are limited to a specific quantum or are they unlimited; and
- time and circumstances in which his/her liabilities as a guarantor will be discharged as also the manner in which SHFCL will notify him/her about this
SHFCL shall keep him/her informed of any material adverse change/s in the financial position of the borrower to whom he/she stands as a guarantor.
4.3. PRIVACY AND CONFIDENTIALITY
All personal information of customers shall be treated as private and confidential [even when the customers are no longer customers], and shall be guided by the following principles and policies. SHFCL shall not reveal information or data relating to customer accounts, whether provided by the customers or otherwise, to anyone, including other companies entities in their group, other than in the following exceptional cases:
- If the information is to be given by law;
- If there is a duty towards the public to reveal the information;
- If the SHFCL’ interests require them to give the information (for example, to prevent fraud) but it should not be used as a reason for giving information about customer or customer accounts [including customer name and address] to anyone else, including other companies in the group, for marketing purposes
- If the customer asks the SHFCL to reveal the information, or with the customer’s permission
- If SHFCL are asked to give a reference about customers, they shall obtain his / her written permission before giving it.
- The customer shall be informed the extent of his / her rights under the existing legal framework for accessing the personal records that an SHFCL holds about him /her.
- SHFCL shall not use customer’s personal information for marketing purposes by anyone including SHFCL unless the customer specifically authorizes them to do so.
4.4. Credit reference agencies
- When a customer opens an account, SHFCL shall inform him / her when they may pass his / her account details to credit reference agencies and the checks SHFCL may make with them.
- SHFCL may give information to credit reference agencies about the personal debts the customer owes them if:
- The customer has fallen behind with his / her payments;
- The amount owed is not in dispute; and
- The customer has not made proposals that the SHFCL are satisfied with, for repaying his / her debt, following SHFCL’ formal demand.
- In these cases, SHFCL shall intimate the customer in writing that they plan to give information about the debts the customer owes them to credit reference agencies. At the same time, SHFCL shall explain to the customer the role of credit reference agencies and the effect the information they provide can have on customer’s ability to get credit.
- SHFCL may give credit reference agencies other information about the customer’s account if the customer has given them his / her permission to do so.
- A copy of the information given to the credit reference agencies shall be provided by the SHFCL to a customer, if so demanded.
4.5. COLLECTION OF DUES
4.5.1 Whenever loans are given, SHFCL should explain to the customer the repayment process by way of amount, tenure and periodicity of repayment. However if the customer does not adhere to repayment schedule, a defined process in accordance with the laws of the land shall be followed for recovery of dues. The process will involve reminding the customer by sending him / her notice or by making personal visits and / or repossession of security if any.
4.5.2 The SHFCL’ collection policy should be built on courtesy, fair treatment and persuasion. SHFCL should believe in fostering customer confidence and long-term relationship. SHFCL’ staff or any person authorized to represent them in collection of dues or / and security repossession shall identify himself / herself and display the authority letter issued by the SHFCL and upon request, display his / her identity card issued by the SHFCL or under authority of the company. SHFCL’ shall provide customers with all the information regarding dues and shall endeavor to give sufficient notice for payment of dues.
4.5.3 All the members of the staff or any person authorised to represent the SHFCL in collection or / and security repossession should follow the guidelines set out below:
- Customer would be contacted ordinarily at the place of his / her choice and in the absence of any specified place at the place of his / her residence and if unavailable at his / her residence, at the place of business / occupation.
- Identity and authority to represent the SHFCL should be made known to the customer at the first instance.
- Customer’s privacy should be respected.
- Interaction with the customer shall be in a civil manner.
- SHFCL’ representatives shall contact the customers between 07.00 a.m to 07.00 p.m, unless the special circumstances of the customer’s business or occupation require otherwise.
- Customer’s request to avoid calls at a particular time or at a particular place shall be honored as far as possible.
- Time and number of calls and contents of conversation would be documented.
- All assistance should be given to resolve disputes or differences regarding dues in a mutually acceptable and in an orderly manner.
- During visits to customer’s place for dues collection, decency and decorum should be maintained.
- Inappropriate occasions such as bereavement in the family or such other calamitous occasions should be avoided for making calls/visits to collect dues.
4.6. COMPLAINTS AND GRIEVANCES
4.6.1. Internal Procedures
- Every SHFCL should have a system and a procedure for receiving, registering and disposing of complaints and grievances in each of its offices.
- The Board of Directors of SHFCL should lay down the appropriate grievance redressal mechanism within the organization to resolve complaints and grievances. Such a mechanism should 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.
- Customer should be told where to find details of SHFCL’s procedure for handling complaints fairly and quickly.
- If the customer wants to make a complaint, he/she should be told:
- How to do this
- Where a complaint can be made
- How a complaint should be made
- When to expect a reply
- Whom to approach for redressal
- What to do if the customer is not happy about the outcome.
- SHFCL’ staff shall help the customer with any questions the customer has.
- If a complaint has been received in writing from a customer, an SHFCL shall endeavourer to send him/her an acknowledgement / response within a week. The acknowledgement should contain the name & designation of the official who will deal with the grievance. If the complaint is relayed over phone at SHFCL’s designated telephone helpdesk or customer service number, the customer shall be provided with a complaint reference number and be kept informed of the progress within a reasonable period of time.
- After examining the matter, an SHFCL shall send the customer its final response or explain why it needs more time to respond and shall endeavourer to do so within six weeks of receipt of a complaint and he/she should be informed how to take his/her complaint further if he/she is still not satisfied.
- Every SHFCL shall publicize its grievance redressal procedure and ensure that it is specifically l made available on its website.