- Promote and strengthen the Microfinance movement in the country by bringing low-income clients to the mainstream financial sector.
- Build progressive, sustainable, and client-centric systems and practices to provide a range of financial services (consistent with regulation) to clients.
- Promote cooperation and coordination among all MFIs and other agencies in order to achieve higher operating standards and avoid unethical practices – including competitive business practices - in order to serve clients better.
Integrity and Ethical Behaviour
1 2 3 4 KPB Fincare Pvt. Ltd.shall design appropriate Board approved policies and operating guidelines to treat clients and employees with fairness and dignity. KPB Fincare Pvt. Ltd.shall incorporate transparent and professional governance system to ensure that staff and persons acting on their behalf are oriented and trained to put this Code into practice. The incentive structure for the staff shall aim at promoting good business and service practices towards customers. KPB Fincare Pvt. Ltd.shall educate clients on the Code of Conduct and its implementation.
KPB Fincare shall disclose all terms and conditions to the client, in a form and manner that is understandable, for all services offered. Disclosure shall be made prior to disbursement in accordance with the Reserve Bank of India’s (RBI) Fair Practices Code through the following documents.
- Loan card
- Loan schedule
- Copy of loan agreement
- KPB Fincare Pvt. Ltd.shall communicate all the terms and conditions for all products/services offered to clients in the official regional language or a language understood by them.
KPB Fincare Pvt. Ltd.shall disclose the following terms:
- Rate of interest on a reducing balance method
- Processing fee
- Any other charges or fees howsoever described
- Total charges recovered for insurance coverage and risks covered
- KPB Fincare Pvt. Ltd.shall communicate in writing, charges levied for all financial services rendered. Fee on non-credit products/services will be collected only after prior declaration to the client.
- KPB Fincare Pvt. Ltd.shall communicate the Annual Percentage Rate (APR) and equivalent monthly rate. Fees charged shall be mentioned separately and shall issue receipt for all financial transactions carried out at the center.
- KPB Fincare Pvt. Ltd.shall follow RBI’s guidelines with respect to interest charges and security deposit.
- Formal records of all transactions shall be maintained in accordance with all regulatory and statutory norms, and borrowers’ acknowledgment/acceptance of terms/ conditions shall form a part of these records.
- Where a loan is not sanctioned against an accepted application, KPB Fincare Pvt. Ltd.shall disclose the reasons for rejection.
- Place in public domain the assessment reports on code of conduct compliance.
- KPB Fincare Pvt. Ltd. shall put their annual reports and annual financial statements in public domain (preferably on their websites) immediately after approval of their Board/AGM
- KPB Fincare shall disclose all terms and conditions to the client, in a form and manner that is understandable, for all services offered. Disclosure shall be made prior to disbursement in accordance with the Reserve Bank of India’s (RBI) Fair Practices Code through the following documents.
- KPB Fincare Pvt. Ltd.shall ensure that the provision of micro finance services to eligible clients is as per RBI guidelines.
- KPB Fincare Pvt. Ltd.shall offer only financial products and services that have been approved by the concerned regulatory authority to their customers (even when acting as agents of other financial institutions).
- KPB Fincare Pvt. Ltd.shall obtain copies of relevant documents from clients, as per standard KYC norms. Additional documents sought shall be reasonable and necessary for completing the transaction.
- The decision on loans shall be taken within reasonable time. KPB Fincare Pvt. Ltd.shall indicate the time limit within which customers can expect a decision on their application and if sanctioned, the time taken for disbursement of loan.
- Products shall not be bundled. (Bundling in this context means making purchase of a product or service conditional for provision of another product or service). The only exceptions to bundling may be made with respect to credit life, life insurance & livestock insurance products, which are typically offered bundled with loans.
- The terms of insurance shall be transparently conveyed to the client and shall comply with RBI & Insurance Regulatory and Development Authority (IRDA) norms. Consent of the client shall be taken in all cases.
- KPB Fincare Pvt. Ltd.shall conduct proper due diligence as per their internal credit policy to assess the need and repayment capacity of client before making a loan and shall only make loans commensurate with the client’s ability to repay.
- If a client has loans from 2 separate MFIs, then KPB Fincare Pvt. Ltd. shall not lend microfinance loans to that client. This shall be validated by the Credit Bureau Report prior to extension of the loan. However, this doesn’t apply in case of personal loans.
- KPB Fincare Pvt. Ltd.shall not, under any circumstance, breach the total debt limit for any client, as prescribed by RBI. This shall be validated by the Credit Bureau Report prior to disbursement of the loan.
- KPB Fincare Pvt. Ltd. after due verification of credit bureau reports will ensure that loans given on the basis of joint liability of group of borrowers (JLG loan) is restricted to Rs 60,000per borrower. Where the loan to a specific borrower exceeds Rs 60,000, or the loan takes the total debt of the borrower above Rs 60,000, such a loan shall be given as an individual loan without involving the JLG. KPB Fincare Pvt. Ltd. will take necessary steps to have appropriate systems and staff with required competencies to deal with individual loans.
- To reduce the errors in identification of borrowers in credit bureau reports, KPB Fincare Pvt. Ltd. will adopt UIDAI number (Aadhaar number) based KYC.
Appropriate interaction and collection practices
- KPB Fincare Pvt. Ltd.shall have clearly defined guidelines for employee interactions with clients.
KPB Fincare Pvt. Ltd.shall ensure that all staff and persons acting on behalf of the MFI
- Use courteous language, maintain decorum, and are respectful of cultural sensitivities during all interaction with clients.
- Shall not indulge in any behaviour that in any manner would suggest any kind of threat or violence.
- Shall not contact clients at odd hours, as per the RBI guidelines for loan recovery agents.
- Shall not visit clients at inappropriate occasions such as bereavement, etc., to collect dues even if two or more successive repayments are not received
- KPB Fincare Pvt. Ltd.shall provide a valid receipt (in whatever form decided) for each and every payment received from the borrower.
- KPB Fincare Pvt. Ltd.shall have a detailed Board approved process for dealing with clients, at each stage of default.
- KPB Fincare Pvt. Ltd.shall not collect shortfalls in collections from employees and our HR policies shall categorically denounce this practice. However in proven cases of frauds by employees, KPB Fincare Pvt. Ltd. can recover the money from employees.
Privacy of client information
KPB Fincare Pvt. Ltd.shall keep personal client information strictly confidential. Client information may be disclosed to a third party subject to the following conditions:
- Client has been informed about such disclosure and prior permission has been obtained in writing.
- The party in question has been authorized by the client with intimation to the MFI to obtain client information from the MFI.
- It is legally required to do so.
This practice is customary amongst financial institutions and available for a close group on reciprocal basis (such as a credit bureau) provided that the
- clients’ prior consent has been obtained and
- the receiver of such information is also bound by these conditions to keep the client information confidential.
KPB Fincare Pvt. Ltd.shall incorporate a formal governance system that is transparent and professional, and adopt the following best practices of corporate governance:
- KPB Fincare Pvt. Ltd.shall observe high standards of governance by inducting persons with good and sound reputation as members of Board of Directors/Governing body and seek to comply with the best standards stipulated in Companies Act, RBI regulations and the Stock Exchange regulations for listed companies (even though the KPB Fincare Pvt. Ltd. may not be companies or listed in a stock exchange).
- KPB Fincare Pvt. Ltd. will endeavor to have independent directors to the extent of 1/3rd of the Governing Board.
- KPB Fincare Pvt. Ltd.shall have a Board approved debt restructuring product/program for providing relief to borrowers facing repayment stress.
- KPB Fincare Pvt. Ltd. will appoint an audit committee of the Board with an independent director as chairperson.
- KPB Fincare Pvt. Ltd.shall ensure transparency in the maintenance of books of accounts and reporting/ presentation and disclosure of financial statements by qualified auditor/s.
- KPB Fincare Pvt. Ltd.shall put in best efforts to follow the Audit and Assurance Standards issued by the Institute of Chartered Accountants of India (ICAI).
- KPB Fincare Pvt. Ltd.shall place before the Board of Directors, a compliance report indicating the extent of compliance with this Code of Conduct and the functioning of the grievance redressal mechanism at various levels of management, specifically indicating any deviations and reasons therefore, at regular intervals, as may be prescribed by Board.
The code covers all employees of KPB Fincare Pvt. Ltd.
- As a matter of free and fair recruitment practice, there will be no restriction on hiring of staff from other MFIs by legitimate means in the public domain like general recruitment advertisements in local newspapers, web advertisements, walk-in interviews, etc.
- Whenever KPB Fincare Pvt. Ltd. seeks to recruit an employee from another MFI, it will be mandatory to seek a reference check from the current employer. The reference check will be sought from current employer only after an offer is made and an offer letter is issued to the prospective employee.
- KPB Fincare Pvt. Ltd.shall respond to the reference check request from another MFI within two weeks.
- KPB Fincare Pvt. Ltd.shall honour notice period as contractually agreed between employer and employee subject to a minimum of one month for an outgoing employee.
- KPB Fincare Pvt. Ltd. shall not recruit an employee of another MFI, irrespective of the grade/level of the employee, without the relieving letter from the previous MFI employer. An exception can however be made in instances where the previous employer (MFI) fails to respond to the reference check request within 20 days.
- KPB Fincare Pvt. Ltd.shall provide such relieving letter to the outgoing employee in case he/she has given proper notice, handed over the charge and settled all the dues towards the MFI, except in proven cases of fraud or gross misconduct by the employee.
- KPB Fincare Pvt. Ltd. shall have a dedicated process to raise clients’ awareness of the options, choices and responsibilities vis-à-vis financial products and services available.
- New clients shall be informed about the organization’s policies and procedures to help them understand their rights as borrowers.
- KPB Fincare Pvt. Ltd. shall ensure regular checks on client awareness and understanding of the key terms and conditions of the products/ services offered / availed. Customer feedback shall be gathered, as part of internal audit systems or through some other regular monitoring such as a system of calls to random sample of customers. The feedback from such monitoring shall be reported to the board periodically.
- KPB Fincare Pvt. Ltd. shall share complete client data with all RBI approved Credit Bureaus, as per the frequency of data submission prescribed by the SRO.
- KPB Fincare Pvt. Ltd. shall provide the data and information called for by all supervisory and regulatory bodies including the SRO.
Feedback/ Grievance Redressal Mechanism
- KPB Fincare Pvt. Ltd. shall establish dedicated feedback and grievance redressal mechanisms to correct any error and handle/receive complaints speedily and efficiently.
The minimum standards required of the GRM are
- an easy procedure for recording a complaint over phone - with details of phone numbers printed on loan cards,
- a staff assisted procedure at the branch for recording complaints/ grievances,
- acknowledgment for receipt of the complaint,
- a time limit for resolution of the complaint,
- a clear appeal procedure in case where customer is not satisfied with the solutions offered by the MFI,
- nodal staff in the branch to guide customers to lodge grievance with RBI or SRO,
- assurance to customers that they will be treated fairly despite the complaint/grievance being lodged.
- KPB Fincare Pvt. Ltd. shall inform clients about the existence and purpose of these mechanisms and how to access them.
- KPB Fincare Pvt. Ltd. shall designate at least one grievance redressal official to handle complaints and/ or note any suggestions from the clients and make his/ her contact numbers easily accessible to clients.
- KPB Fincare Pvt. Ltd. shall display at all branches and on the website, contact number and address of SRO (as applicable) nodal official and details of the grievance redressal system of the SRO.
- KPB Fincare Pvt. Ltd. shall have an appropriate mechanism for ensuring compliance with the Code of Conduct.
- Where complainants are not satisfied with the outcome of the investigation conducted into their complaint, they shall be notified of their right to refer the matter to the grievance redressal mechanism established by the SRO, as applicable.
- KPB Fincare Pvt. Ltd. shall prepare a monthly report on grievances received, resolved and pending for a senior management review and periodic reports to the board.
KPB Fincare Pvt. Ltd. shall display the Client Protection Guidelines in all branches and offices in English and the local language, in plain view. KPB Fincare Pvt. Ltd.
- Shall endeavor to provide micro finance services to all eligible clients, as per RBI guidelines.
- Shall educate clients, staff, and any persons acting on their behalf on the Code of Conduct and its implementation.
Shall disclose all terms and conditions to the client for all products/services offered, prior to disbursement, in accordance with the Reserve Bank of India’s (RBI) fair practices code through the following documents.
- Loan card
- Loan schedule
- Copy of Loan agreement
- Shall communicate all the terms and conditions for all products/services in the official regional language or a language understood by clients.
5. Shall disclose the following terms:
- Rate of interest on a reducing balance method
- Processing fee
- Any other charges or fees howsoever described
- d. Total charges recovered for insurance coverage and risks covered
- Shall communicate in writing, charges levied for all financial services rendered and issue receipts for financial transactions carried out at the center.
- Shall not collect fee on non-credit products/ services without prior declaration to the client.
- Shall disclose APR and equivalent monthly rate. All fees charged shall be mentioned separately.
- Shall follow RBI’s guidelines with respect to interest charges and security deposit.
- Shall obtain copies of relevant documents from clients, as per standard KYC norms. Additional documents sought must be reasonable and necessary for completing the transaction.
- Shall disclose reasons for rejection of loans to applicants.
- Shall indicate the time limit within which applicants/customers can expect a decision on their application and if sanctioned, the time taken for disbursement of loan.
- Shall not bundle products, except for credit life, life insurance & live-stock insurance products. The terms of insurance should be transparently conveyed to the customer and must comply with RBI & IRDA norms. Consent of the client must be taken in all cases.