Fair Practice Code Policy
The following are the Company's key commitments to its customers:
- To provide professional, efficient, courteous, diligent and speedy services.
- Not to discriminate on the basis of religion, caste, sex, and descent in any manner.
- To be fair and honest in all advertisements and marketing of loan products.
- To provide customers with accurate and timely disclosure of terms, costs, rights and liabilities as regards loan transactions.
- If sought, to provide such assistance or advise to customers seeking loans.
- To attempt, in good faith, to resolve any disputes or differences with customers by setting up complaint redressal system within the organization.
- To comply with all the regulatory requirements in good faith.
- Seek to use governance structures that provide appropriate levels of oversight in the areas of audit, risk management and potential conflicts of interest and to implement compensation and other policies that align the interests of owners and management.
- Seek to confirm that the funds do not flow to companies that utilize child or forced labour or generally maintain discriminatory policies against religion or gender.
Application for loan and their processing
- All communications to the customers / borrowers shall be made in English / vernacular language or a language as understood by the borrower.
- Loan application forms should include necessary information which affects the interest of the borrower.
- All applications shall be serially numbered and all valid loan applications shall be logged into the loan origination system where a unique agreement reference is generated. Customer will be informed of such agreement number. The loan application form shall indicate the documents required to be submitted with the application form.
- Loan applications shall be processed and, after necessary due diligence is done, customer shall be issued a sanction letter. The acceptance of the terms and conditions by the borrower shall be kept by the Company, for its records. The Customer shall sign the loan agreement and other documents. Such agreements and documents shall have the schedule for interest rates and charges mentioned in bold. All the terms and conditions shall be explained to the customers.
- Application fee - In certain products, the customer will be required to pay a non-refundable application fee for the processing of the application. In such cases, the Company will acknowledge the Non-refundable fee via acknowledgement in application form / separate letter.
Loan appraisal and terms / conditions, interest rates
- The company shall convey in writing, to the borrower in the vernacular language or a 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 annualized 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, the company shall mention the penal interest charged for late repayment in bold, in the loan agreement.
- The Company has an "Interest Rate" policy which lays out the principles for charging Interest and other fees to customers.
- The interest rate to the customer is determined based on cost coverage and reasonable returns to the organization and its shareholders.
- The Company's pricing methodology will continue to evolve and be more and more refined as we get more insights into risk levels of each sub segment.
- The Company offers loan rates based on loan size, perceived credit risk, nature and value of collateral and credit history with other FIs. Existing customers who take a repeat loan will also get benefit of lower rates as they have a demonstrated track record.
Disbursement of loans including changes in terms and conditions
- The company shall 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. This is to ensure that borrowers are fully aware of the terms and conditions of the loans, including the rate of interest at the time of sanction of loans.
- The Company has a Policy for Loan against gold jewellery and loan agreement, including procedure for storage / disposal of the jewellery pledged. The Company will take adequate safeguards with respect to jewellery received, and its storage. The Company will ensure that jewellery received is adequately insured. The Company or its employees will not submit bids for the jewellery in the disposal process.
- The Company shall ensure that a loan sanction letter (pawn ticket) is given to the customer, containing all the terms and conditions governing the loan facility, in the local language or other language understood by the customer. The loan sanction letter (pawn ticket) will also mention the loan amount, loan account number, interest rate, charges, loan processing fees etc. The loan sanction letter (pawn ticket), which will bear the signature of the authorized official of the company, will also serve as a receipt for the security (gold) pledged at the branch by the customer.
- The Company shall issue a signed and, normally, a system generated receipt for all cash payments made by the customer immediately. The Company shall also accept payments vide cheques, demand drafts, electronic transfers etc. subject to the condition that return of the security (gold) will be made only after confirmation of realization.
- Even though the loan sanction letter (pawn ticket) contains all applicable terms and conditions of the loan, the Company shall, nevertheless, endeavour, on a best effort basis, to send advices, reminders etc. regarding due date for payment of interest, principal etc. by letter, courier service, telephone, SMS etc.
- The Company shall, on demand, provide the customer or his duly authorized representative with a statement of the loan account at any time during the currency of the loan or immediately upon closure. However, the Company may, at its discretion, require payment of reasonable processing charges by the customer for providing statement of account if such demand is made 30 calendar days after closure of the account.
- The Company shall not, in the normal course, make any changes / modifications in the terms and conditions of the loan, including rate of interest, which could adversely affect the customer financially or otherwise. In abnormal circumstances when such changes / modifications are inevitable, keeping in view the new circumstances, adequate and proper notice shall be given to the customer about any such change / modification.
Post disbursement supervision
The post disbursement supervision by the Company, particularly in respect of loans, shall be constructive with a view to take care of any genuine difficulty that the borrower may face. For collection purposes, the Company shall adhere to the policy guidelines, as per the Code of Conduct for Collection and Recovery of dues from borrowers.
Further, the Company reiterates the following points with regard to post disbursement supervision:
- Inappropriate occasions such as bereavement in the family or events of similar nature, if known to the Company, will be avoided for making calls or visits.
- Before taking decision to recall / accelerate payment or performance under the facility terms or seeking additional securities, the Company shall give notice to borrowers, as specified in the facility terms or a reasonable period if no such condition exists in facility terms (unless the security is in jeopardy).
- The company shall release all securities on receiving the payment of or realization of loan, subject to any legitimate right or lien for any other claim the Company may have against the borrowers / guarantors. If such right is to be exercised, borrowers / guarantors shall be given intimation about the same with full particulars about the remaining claims and also the documents under which the Company is entitled to retain the securities.
Recovery of loans
- The Company will not, as a matter of fair dealing, normally recall the loan before the initially agreed tenure, except in unanticipated or abnormal circumstances where the Company's interests are adversely affected e.g. when the security value diminishes substantially, when the quality of gold is not found to be acceptable, due to any regulatory / government directives etc. In all such cases proper and reasonable notice shall be given to the customer recalling the loan before expiry of the normal tenure.
- The Company will make all possible soft or persuasive efforts to get the customer to repay the dues without resorting to disposal of the security. The Company does not accept nor will it encourage the use any coercive or hard measures to recover its dues from the customer.
- The Company will resort to disposal of security (gold) only as a last resort and that too after adequate and proper notice is served to the customer, for repayment of the dues. Such notice will be as per the terms contained in the sanction letter (pawn ticket) and also in compliance with applicable laws and regulatory guidelines.
- The Company will deliver the security (gold) to the customer immediately upon settlement of the loan, in the same condition as it was at the time of sanction of the loan. In case of any damage caused to the security (gold) due to mishandling by its employees, the Company shall, at its cost, get the damage repaired or alternately pay reasonable compensation to the customer on a case-to-case basis. If the security (gold) has signs of damage thereon, before being taken custody of by the Company at the time of sanction of loan, the fact will be briefly incorporated in the sanction letter (pawnticket).
- The Company will exercise only legitimate right of lien over the pledged security or such cash surplus as may arise upon settlement of existing loans at any time. Such right of lien shall arise only if the customer has any other dues, either directly or as guarantor, and will be subject to proper intimation of such right of lien being given to the customer by the Company.
- The disposal of the security (gold) will be taken up through public auction when the customer does not positively respond to the communications sent by the Company, to close the loan account along with interest and other charges.
- Where the Company proposes to dispose of the security even before the normal tenure of the loan, based on the rights conferred on the Company vide loan application and loan sanction letter (pawn ticket) adequate and proper notice will be served on the customer before such action is initiated for recovery of dues.
- In the matter of recovery of loans, the Company will 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, the Company will ensure that the staff are adequately trained to deal with the customers in an appropriate manner.
Lending against collateral of gold jewellery
While lending to individuals against gold jewellery, LuLu Finserv shall adopt the following:
The Company shall put in place a Board approved policy for lending against gold that will inter alia, cover the following:
- Adequate steps to ensure that the KYC guidelines stipulated by RBI are complied with, and to ensure that adequate due diligence is carried out on the customer, before extending any loan,
- Proper assaying procedure for the jewellery received,
- Internal systems to satisfy ownership of the gold jewellery,
- Adequate systems for storing the jewellery in safe custody, reviewing the systems on an on-going basis, training the concerned staff and periodic inspection by internal auditors to ensure that the procedures are strictly adhered to. Normally, such loans should not be extended by branches that do not have appropriate facility for storage of the jewellery,
- The jewellery accepted as collateral should be appropriately insured,
- Transparent auction procedure in case of non-repayment with adequate prior notice to the borrower. There should be no conflict of interest and the auction process must ensure that there is arm's length relationship in all transactions during the auction, including with group companies and related entities,
- The auction should be announced to the public by issue of advertisements in at least two newspapers, one in vernacular language and another in national daily newspaper,
- As a policy, the Company themselves will not participate in the auctions held,
- Gold pledged will be auctioned only through auctioneers approved by the Board,
- The policy shall also cover systems and procedures to be put in place for dealing with fraud, including separation of duties of mobilization, execution and approval.
Wherever the Company engages digital lending platforms as their agents to source borrowers and/ or to recover dues, the Company will follow the following instructions:
- Names of digital lending platforms engaged as agents shall be disclosed on the website of the Company.
- Digital lending platforms engaged as agents shall be directed to disclose upfront to the customer, the name of the LuLu Finserv on whose behalf they are interacting with him.
- Immediately after sanction, but before the execution of the loan agreement, the sanction letter shall be issued to the borrower on the letter head of LuLu Finserv.
- A copy of the loan agreement, along with a copy each of all enclosures quoted in the loan agreement, shall be furnished to all borrowers at the time of sanction / disbursement of loans.
- Effective oversight and monitoring shall be ensured over the digital lending platforms engaged by LuLu Finserv.
- Adequate efforts shall be made towards the creation of awareness about the grievance redressal mechanism.
- LuLu Finserv will 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, will be conveyed within 21 days from the date of receipt of request. Such transfer shall be as per transparent contractual terms in consonance with the law.
- As a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers the Company shall not charge foreclosure charges / pre-payment penalties on any floating rate term loans sanctioned to individual borrowers.
- Unless authorized by the borrower, the Company will treat all personal information as private and confidential. The Company may not reveal transaction details of the borrowers to any other persons except under following circumstances
- The Company shall not deliberately promote a product with any ulterior / selfish motives or contrary to the customer requirements or expectations as disclosed by the customer. The Company will ensure that its personnel engaged in marketing and operations are suitably trained and instructed so as to preclude selling of its products by misrepresentation to the customer / prospective customer.
- The Company will not indulge in profiteering by charging usurious rates of interest on loans or take undue advantage of adverse market conditions. The rates of interest will be based on variables such as cost of funds, risk premium, loan scheme, loan per gram, profit margin etc. and shall be in conformity with the Interest Rate policy of the Company and Regulatory Guidelines from time to time. It shall also, by and large, be in tune with industry practices and benchmarks.
- Full and updated information regarding loan schemes, rate of interest, loan per gram, charges etc. will be displayed on the website of the Company and also displayed in the branches. Complete or select information will also be made available through various media channels, posters, brochures, notices, displays etc. based on the decisions of the management of the Company from time to time