Fair Practices Code of VLS Finance Ltd  

Reserve Bank of India vide its Circular No. DNBS(PD)CC No. 80/03.10.042/2005-06  dated 20th September, 2006 had prescribed broad guidelines on fair practices that are to be framed and approved by the Board of Directors of all Non-Banking Financial Companies. The fair practices code so framed and approved by the Board of Directors of the Company needs to be published and disseminated on the web-site of the Company for the information of the public.

The following ‘Fair Practices Code of the Company’ was approved by the Board of Directors of the Company in its meeting held on 18/07/2007.  Accordingly, the Company shall adhere to the following Fair Practices Code in its dealings with the Public.

(i) Applications for loans and their processing

(a) The loan  application  forms  of the Company will  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.

(b) The Company shall  devise  a  system  of  giving  acknowledgement  for receipt  of all loan applications. Further, the time frame within which loan  applications  is likely to  be  disposed  of  shall  also  be  indicated  in  the acknowledgement.

(ii) Loan appraisal and terms/conditions

The  Company shall  convey  in  writing  to  the  borrower,  by  means  of  sanction letter  or  otherwise,  the amount  of  loan  sanctioned  along  with  the  terms  and conditions  including  annualized  rate  of  interest  and  method  of  application thereof  and  keep  the  acceptance  of  these  terms  and  conditions  by  the borrower on the Company’s record. Rejection of loan applications with reasons thereof, shall also be communicated to the applicants.

(iii) Disbursement of loans including changes in terms and conditions

(a) The  Company  shall  give  notice  to  its  borrowers  of  any  change  in  the terms  and  conditions  including  disbursement  schedule,  interest  rates, service charges,  prepayment charges etc. The Company shall also ensure that  the changes  in  interest  rates  and  charges  are  effected  only prospectively.  A suitable condition in this regard shall be incorporated in the loan agreement.

(b) Any decision  to  recall  /  accelerate  payment  or  performance  under  the agreement shall be in consonance  with the loan agreement.

(c) 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 the Company  may  have against  the borrower/s.  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.

 (iv) General

(a) 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 new information, not earlier disclosed by the borrower, has come to the notice of the Company.

(b) 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 to the borrower within  21  days  from  the  date of  receipt  of  any such request. Such transfer shall be as per transparent contractual terms in consonance with law.

(c) In the matter of recovery of loans, the Company shall not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.

 (v) The Company shall have a grievance redressal cell consisting of Vice President (Credit-Operations), Company Secretary and One Director from the Board to resolve disputes arising in this regard. The said cell shall meet as and when any grievance is received. The said cell shall periodically apprise the Board of Directors of grievances received by it and their disposal to enable the Board to review the compliance of the Fair Practices Code  and  functioning  of the  grievances redressal mechanism.