A. (i) Applications for loans and their processing
(ii) Loan appraisal and terms/conditions
Fundfina conveys in writing to the borrower in English, or in the vernacular language as understood by the borrower on request, by means of sanction email, in the user account on platform and/or other electronic media, the amount of loan sanctioned along with the terms and conditions including annualised rate of interest thereof and records 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, Fundfina mentions the penal interest charged for late repayment in a separate clause in bold in the loan agreement.
It is understood that in a few cases, borrowers at the time of sanction of loans are not fully aware of the terms and conditions of the loans including rate of interest, either because the NBFC does not provide details of the same or the borrower has no time to look into detailed agreement. Hence Fundfina sends a copy of Draft agreement to its users along with acknowledgment emails describe earlier in (i)(c) to allow its user ample time and opportunity to assess and understand the loan agreement.
We understand that Not furnishing a copy of the loan agreement or enclosures quoted in the loan agreement is an unfair practice and this could lead to disputes between Fundfina and the users with regard to the terms and conditions on which the loan is granted.
Fundfina, therefore, furnishes a copy of the loan agreement in English and on request of users in the vernacular language as understood by the user along with a copy each of all enclosures quoted in the loan agreement to all the users at the time of disbursement of loans.
(iii) Disbursement of loans including changes in terms and conditions
(v) The Board of Directors of Fundfina also lay down the appropriate grievance redressal mechanism within the organization to resolve disputes arising in this regard. Such a mechanism ensures that all disputes arising out of the decisions of platform’s functionaries and participants are heard and disposed of at least at the next higher level. The Board of Directors also provides for periodical review of the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of management. A consolidated report of such reviews is submitted to The Board at regular intervals.
(vi) Complaints about excessive interest charged by NBFCs
The Reserve Bank has been receiving several complaints regarding levying of excessive interest and charges on certain loans and advances by NBFCs. Though interest rates are not regulated by the Bank, rates of interest beyond a certain level may be seen to be excessive and can neither be sustainable nor be conforming to normal financial practice.
Board of Fundfina has, therefore, laid out appropriate internal principles and procedures in determining interest rates and processing and other charges. The interest charged is capped at 30%.
In this regard the guidelines indicated in the Fair Practices Code about transparency in respect of terms and conditions of the loans have been kept in view.
(vii) Regulation of excessive interest charged by NBFCs