Fair Practice Code Policy

All parts of this code shall apply to all the products and services offered by saarathi finance and credit private limited including services offered over the phone, by post, through interactive electronic devices, on the internet, or by any other method

Under the Notifications issued by the Reserve Bank of India by its Circular No. RBI/2006-07/138 DNBS (PD) CC No.80/03.10.042/2005-06 dated 28th September 2006 (as updated by RBI from time to time) and consolidated in last Master Direction- Reserve Bank of India (Non-Banking Financial Company- Scale Based Regulation) Directions, 2023, notification No. RBI/DoR/2023-24/106 DoR.FIN.REC.No.45/03.10.119/2023-24 updated as of March 21, 2024, Saarathi Finance and Credit Private Limited (‘Saarathi Finance’ or ‘the Company’) has formulated and adopted this Fair Practices Code (“FPC” or “the Code”) which sets the fair practice standards while dealing with its lending business.

The Company shall adopt all the best practices prescribed by the RBI from time to time and shall make appropriate modifications, if any, necessary to this Code to conform to the standards so prescribed. The Company’s policy is to treat all borrowers consistently and fairly. The Company will ensure that the implementation of the Code is the responsibility of the entire organization. The Company's fair lending practices shall apply across all its operations, including marketing, loan origination, processing, servicing, and collection activities.

1. Objectives of the Fair Practices Code

The Code has been adopted:

• To promote good and fair practices by setting minimum standards in dealing with borrowers
• To increase transparency so that the borrowers can have a better understanding of what they can reasonably expect of the services availed from the Company
• To encourage market forces through competition, to achieve higher operating standards
• To promote a fair and cordial relationship between borrowers and the Company

2. Applicability

The Code shall apply to all employees, its agents/ representatives /third-party vendors/service providers, and other persons authorized to represent the Company in the ordinary course of its business.

3. Non-Discrimination Policy

The Company shall offer all financial products, to eligible qualified applicants, without discrimination based on caste, color, creed, race, religion, marital status, sex, age, or handicap, directly or through associates.

4. Language of the Communication

All required communications and information to the borrower, whether in physical form or digital means, will be in the language as understood by the borrower: English, Hindi, or appropriate Vernacular or local language.

5. Applications for Loans and their Processing

1. Loan application forms shall include the necessary information that affects the interest of the borrower so that an informed decision can be taken by the borrower. The loan application form shall also indicate the list of documents required to be submitted with the application form.
2. Receipt of completed application forms will be duly acknowledged by the Company. The acknowledgment will indicate the approximate time frame within which the borrower can expect to hear from the Company regarding his/ her loan application. Transparent process flow will include acknowledgment and time frame in case of digital documentation.

6. Loan Appraisal and Terms and Conditions

• All loan applications will be assessed as per the Company’s internal credit policies and appraisal process.
• Upon approval of the loan, a sanction letter indicating the amount of loan sanctioned, the applicable annualized rate of interest, method of application of the same along with other important terms and conditions will be conveyed in writing to the borrower, either in paper or digital form. The Company shall also communicate to the borrower if the loan is rejected.
• The Company will mention any penal charges/ additional charges in bold in the loan agreement.
• After the execution of the loan agreement (including paper and digital agreements), the borrowers will be furnished a copy of the loan agreement along with a copy of each of all enclosures quoted in the loan agreement.

7. Disbursement of Loans including changes in Terms and Conditions

• Any changes in the terms and conditions impacting the borrower including disbursement/ repayment schedule, rate of interest, service charges, prepayment charges, etc. shall be informed to the borrower in writing.
• Changes in interest rates and other charges (which are averse to the borrower) shall be with prospective effect only.
• The decision to recall any loan / accelerate payment shall be done in accordance with the terms and conditions of the loan agreement.
• All underlying securities shall be released, as per the request of the borrower, after the full repayment of the loan along with all other charges as per the terms of the loan agreement and subject to the exercise of any right of lien/set off, for which a notice shall be given to the borrower with complete details about conditions under which the Company is entitled to retain the securities till the relevant claim is settled/ paid.

8. Reset of floating Interest rate on Equated Monthly Instalments (EMI) based Loans

At the time of sanction of EMI-based floating rate loans, the Company is required to take into account the repayment capacity of the borrower to ensure that adequate headroom/ margin is available for elongation of tenor and/ or increase in EMI, in the scenario of possible increase in the interest rates during the tenor of the loan.

• iAt the time of sanction, the Company shall clearly communicate to the borrower, about the possible impact of a change in interest rate on the loan leading to changes in EMI and/or tenor or both. Subsequently, any increase in the EMI/ tenor or both on account of the above shall be communicated to the borrower immediately through appropriate channels.
• The borrower shall also be given the choice to opt for (a) enhancement in EMI or elongation of tenor or for a combination of both options; and, (b) to prepay, either in part or in full, at any point during the tenor of the loan. Levy of foreclosure charges/ pre-payment penalty shall be subject to extant instructions.
• The Company shall ensure that the elongation of tenor in case of a floating rate loan does not result in negative amortization.
• At the time of reset of interest rates, the Company shall provide the option to the borrowers to switch over to a fixed rate as per its Board-approved policy. The policy, inter alia, specifies the maximum number of times and frequency at which a borrower will be allowed to switch during the tenor of the loan.
• All applicable charges for switching loans from floating to fixed rate and any other service charges/ administrative costs incidental to the exercise of the above options shall be transparently disclosed in the sanction letter and also at the time of revision of such charges/ costs by the Company from time to time.

The above procedures and terms and conditions are guided by the Board-approved Interest Rate Policy.

9. Regulation of excess Interest charged to the Borrowers

The Company shall follow the interest rate model adopted and approved by the Board and published on the website of the Company. The Company shall follow the appropriate internal principles and procedures in determining interest rates and processing and other charges in line with the approved policies from time to time.

10. Responsible lending conduct - release of movable/immovable property documents on repayment/ settlement of loans

A Standard Operating Procedure (SOP)- Property Documents Handover & Charge Release Process in line with RBI guidelines has been put in place for the release of original movable/immovable property documents for all cases.

The Company shall release all the original property documents and remove charges registered with any registry within 30 days after the complete repayment or settlement of the loan account. The borrower shall be given the option of collecting the original property documents from any of the offices/branches of the Company as per her/his preference. The timeline and place of return of original property documents shall be mentioned in the loan sanction letters issued to the borrower. To address the contingent event of the demise of the sole borrower or joint borrowers, the Company has a procedure for the return of original property documents to the legal heirs.

11. Privacy and Confidentiality

Credit Reference Agencies/ Credit Information Companies (CICs):

All personally identifiable information or other sensitive personal data of the Borrowers shall be handled by the Company in accordance with the requirements of the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 issued under the Information Technology Act, 2000 and the Digital Personal Data Protection Act, 2023 and the rules framed thereunder, as amended from time to time.

• The Company will treat the personal information of borrowers even after the borrowers cease to be the Company's borrower, as private and confidential. The Company will not reveal the data or information of borrowers to anyone except as provided above and in the following exceptional cases:
  • Required by law
  • Duty towards the public to reveal information
  • The Company’s interest requires giving information
  • The Company has consent/ permission from the borrowers
• The Company’s representatives will inform the borrowers about their rights/ liabilities under the Laws of India for accessing the personal records that the Company holds about him/her.
• The Company will not use borrowers’ personal information for marketing purposes unless the borrower specifically authorizes the Company to do so.
• The Company may provide such information to its group/associate entities or companies for which it has obtained consent/permission from its borrowers under loan application/ sanction letter / most important terms & conditions/loan agreement.

• The Company may share details of the loan and repayment track record of its borrowers to the Credit Information Companies as per the regulatory directions/ guidelines or the Company’s internal policies.
• The Company may share information with the Credit Information Companies about the personal debts the borrower owes it if:
  • The borrower has fallen behind his/her payments
  • The amount owed is not in dispute
  • The borrower has not made payment following our formal demand for repayment of dues.

Sharing of information

• Borrowers shall 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.
• The employee/ staff/ representative of the Company shall identify themselves, whenever/wherever they meet the borrowers for collections.
• The employee/ staff/ representative of the Company shall respect the borrowers' privacy.
• The representatives of the Company shall contact the borrowers between 08:00 hours to 19:00 hours unless the circumstances of the borrowers’ business or occupation require otherwise.
• Borrowers' request to avoid calls at a particular time or at a particular place shall be honoured as far as possible.
• The time and number of calls and contents of conversations as far as possible would be documented.
• All assistance shall be given to resolve disputes or differences regarding dues mutually acceptable and in an orderly manner.
• Calls /visits for collection of dues shall be avoided under the circumstances of bereavement in the family or such other calamitous occasions.
• The employee/ staff/ representative of the Company shall maintain decency and decorum while visiting the borrowers' place for collections. The interaction by the employee/ staff/ representative of the Company shall be in a civil manner.

12. Collection of Dues from the Borrower

• The Company shall inform the borrower at the time of execution of loan documents about repayment terms and conditions provided in the annexure to the loan agreement. In case, the borrower does not adhere to the repayment schedule as per the loan agreement, the Company shall remind the borrower by way of notice or by personal visits, of his/her obligation to pay the arrears or possession of the security given by the borrower.
• The Company shall always provide the borrower, the information regarding dues and shall endeavor to provide sufficient notice for payment of dues. The staff representing the Company while on field duty for collection of over dues/arrears, or taking possession of security, shall identify his/her identity including identity card issued by the Company, as a matter of courtesy and fair treatment in building borrower’s confidence.
• The employee/ staff/ representative of the Company authorized for collections and/or possession of security shall follow the following guidelines:
  1. Borrowers shall 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.
  2. The employee/ staff/ representative of the Company shall identify themselves, whenever/wherever they meet the borrowers for collections.
  3. The employee/ staff/ representative of the Company shall respect the borrowers' privacy.
  4. The representatives of the Company shall contact the borrowers between 08:00 hours to 19:00 hours unless the circumstances of the borrowers’ business or occupation require otherwise.
  5. Borrowers' request to avoid calls at a particular time or at a particular place shall be honoured as far as possible.
  6. The time and number of calls and contents of conversations as far as possible would be documented.
  7. All assistance shall be given to resolve disputes or differences regarding dues mutually acceptable and in an orderly manner.
  8. Calls /visits for collection of dues shall be avoided under the circumstances of bereavement in the family or such other calamitous occasions.
  9. The employee/ staff/ representative of the Company shall maintain decency and decorum while visiting the borrowers' place for collections. The interaction by the employee/ staff/ representative of the Company shall be in a civil manner.

13. Grievance Redressal Mechanism

A “Customer Grievance Committee" hereinafter referred to as "the Committee" has been formed comprising the Chief Executive Officer, Business Heads, Company Secretary, and Head of Operations/ Principal Nodal Officer. A report on customer complaints shall be circulated to the Committee periodically. The Committee shall meet at least in six months. The Principal Officer designated by the Company shall be approached by the public for resolution of customer complaints against the Company. The name and contact details of the Officer and the Regional Office of Department of Supervision, RBI, Mumbai where the borrowers can approach if the complaint is not redressed within a month shall be prominently displayed at the branches where the business is transacted.

In addition to the above, the Company has a Whistle Blower policy in place where the borrowers of the Company are entitled to bring to the notice of the designated ombudsman the act of any employee, borrowers, and vendors of the Company that is in contravention of the said whistle blower policy.

Details of the Grievance Redressal Officer/ Principal Nodal Officer along with the escalation mechanism are available on the website and branches of the Company.

14. General Provisions

• The Company shall refrain from interference with the business of the borrowers except under 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).
• In case of written receipt of request for transfer of loan either from the borrower or from a bank/ financial institution which proposes to take over the account, the consent or otherwise the objection if any, would be conveyed within 21 days from the date of receipt of such request. Such transfer will be as per the terms and conditions of the loan in consonance with the law.
• For recovery of the loan, the Company will not resort to undue harassment and will follow procedures adopted internally by the Company within the applicable legal framework.
• The Company will ensure that the staff are adequately trained to deal with the borrowers appropriately.
• The Fair Practices Code (FPC) so framed and approved by the Board of Directors shall be published and disseminated on the website of the company, if any, for the information of the public.

15. Review

A review of compliance with the Fair Practices Code and the functioning of the grievance redressal mechanism would be done by the Management regularly and a consolidated report of such reviews will be submitted to the Board of Directors once in 6 months.

---

Policy Translations