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INTEGRITY AND ETHICAL BEHAVIOUR
- Chaitanya design appropriate policies and operating guidelines to treat clients and employees with dignity
- Chaitanya 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
- Chaitanya educate clients on the Code of Conduct and its implementation
- Chaitanya disclose all terms and conditions to the client for all services offered. Disclosure must be made prior to disbursement in accordance with the Reserve Bank of India’s (RBI) fair practices code, in any of the following ways:
- Individual sanction letter
- Loan card
- Loan schedule
- Through Group/Centre meetings (Details can be printed on a paper and all borrowers can sign on the same as acknowledgement of their acceptance)
- Chaitanya communicate all the terms and conditions for all products/services offered to clients in the official regional language or a language understood by them.
- At the minimum, Chaitanya 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
- Chaitanya communicate in writing, charges levied for all financial services rendered. Fee on non-credit products/services will be collected only with prior declaration to the client.
- Chaitanya declare all interest and fees payable as an all-inclusive Annual Percentage Rate (APR) and equivalent monthly rate.
- Chaitanya follow RBI’s guidelines with respect to interest charges and security deposit.
- Formal records of all transactions must be maintained in accordance with all regulatory and statutory norms, and borrowers’ acknowledgment/acceptance of terms/conditions must form a part of these records.
- Fair Practices
- Chaitanya ensure that the provision of micro finance services to eligible clients is as per RBI guidelines.
- Chaitanya obtain copies of relevant documents from clients, as per standard KYC norms. Additional documents sought must be reasonable and necessary for completing the transaction.
- Products should not be bundled. The only exceptions to bundling may be made with respect to credit life, life insurance & live-stock insurance products, which are typically offered bundled with loans. The terms of insurance should be transparently conveyed to the client and must comply with RBI & Insurance Regulatory and Development Authority (IRDA) norms. Consent of the client must be taken in all cases.
- Avoiding Over-indebtedness
- Chaitanya conduct proper due diligence as per their internal credit policy to assess the need and repayment capacity of client before making a loan and must only make loans commensurate with the client’s ability to repay.
- If a client has loans from 2 separate lenders, then irrespective of the source of the loans, Chaitanya shall not be the third lender to that client.
- Chaitanya will not, under any circumstance, breach the total debt limit for any client, as prescribed by RBI or Central/State Government(s).
- Appropriate interaction and collection practices
- Chaitanya have clearly defined guidelines for employee interactions with clients
- Chaitanya 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.
- DO NOT indulges in any behavior that in any manner would suggest any kind of threat or violence.
- DO NOT contact clients at odd hours, as per the RBI guidelines for loan recovery agents.
- DO NOT visit clients at inappropriate occasions such as bereavement, sickness, etc., to collect dues.
- Chaitanya provide a valid receipt (in whatever form decided by the MFI) for each and every payment received from the borrower.
- Chaitanya have a detailed Board approved process for dealing with clients, at each stage of default.
- Chaitanya will not collect shortfalls in collections from employees An exception can however be made in proven cases of frauds by employees.
- Privacy of client information
Chaitanya 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 permission has been obtained in writing.
- The party in question has been authorized by the client 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).
Chaitanya incorporate a formal governance system that is transparent and professional, and adopts the following best practices of corporate governance:
- Chaitanya observe high standards of governance by inducting persons with good and sound reputation as members of Board of Directors/Governing body.
- Chaitanya endeavor to induct independent persons to constitute at least 1/3rd of the Governing Board, and the Board must be actively involved in all policy formulations and other important decisions.
- Chaitanya have a Board approved debt restructuring product/program for providing relief to borrowers facing repayment stress.
- Chaitanya appoint an audit committee of the Board with an independent director as chairperson.
- Chaitanya ensure transparency in the maintenance of books of accounts and reporting/ presentation and disclosure of financial statements by qualified auditor/s
- Chaitanya puts in best efforts to follow the Audit and Assurance Standards issued by the Institute of Chartered Accountants of India (ICAI).
- Chaitanya shall place before the Board of Directors, a compliance report indicating the extent of compliance with this Code of Conduct, specifically indicating any deviations and reasons therefore, at the end of every financial year.
The code covers all Chaitanya staff.
- 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 Chaitanya recruits from another MFI, it will be mandatory to seek a reference check from the previous 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.
- Chaitanya should respond to the reference check request from another MFI within two weeks.
- Chaitanya honor a one month notice period from an outgoing employee.
- Chaitanya 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 30 days. Chaitanya 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.
- A level up to the Branch Manager position, the said employee shall not be assigned to the same area he/she was serving at the previous employer, for a period of 1 year.
- CLIENT EDUCATION
- Chaitanya have a dedicated process to raise clients’ awareness of the options, choices and responsibilities vis-à-vis financial products and services available
- New clients will be informed about the organization’s policies and procedures to help them understand their rights as borrowers.
- Chaitanya ensure regular checks on client awareness and understanding of the key terms and conditions of the products/ services offered / availed. (As part of internal audit systems or through some other regular monitoring)
- DATA SHARING
Chaitanya will agree to share complete client data with all RBI approved Credit Bureaus, as per the frequency of data submission prescribed by the Credit Bureaus.
- FEEDBACK/ GRIEVANCE REDRESSAL MECHANISM
- Chaitanya has established dedicated feedback and grievance redressal mechanisms to correct any error and handle/receive complaints speedily and efficiently.
- Chaitanya inform clients about the existence and purpose of these mechanisms and how to access them.
- Chaitanya has 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.
- Chaitanya have an appropriate mechanism for ensuring compliance with the Code of Conduct.
- Where complainants are not satisfied with the outcome of the investigation conducted by the concerned MFI into their complaint, they shall be notified of their right to refer the matter to the grievance redressal mechanism established by the Industry Associations.