The Fair Practice Code (in short FPC) of Village Financial Services Ltd (the Company) , as required under the Reserve Bank of India’s Master Circular dated July 01, 2015, RBI/201516/16 DNBR (PD) CC.No.054/03.10.119/2015-16.
The Company has adopted all the prescribed rules and regulations laid down in the above Master Circular. These are as follows:
Application for loans and their processing
- All communication with the borrowers will be in local languages.
- All Loan Application Forms include the necessary information which affects the interest of the borrowers so that the borrower can make a meaningful comparison with the terms and conditions offered by other MFIs and it will help them to take a proper decision.
- The required documents to be submitted are written clearly in the Loan Application Form.
- An acknowledgement for receipt of Loan Applications will be given to the borrower.
Loan appraisal and terms/conditions
- The Company will properly communicate to all borrowers the amount of loan sanctioned along with terms and conditions including annualized rate of interest and method of application.
- Acceptance of terms and conditions by the borrowers shall be kept on record.
- The Company shall furnish a copy of the loan agreement along with the enclosures at the time of sanction/disbursement of loans (a written application of the borrower is required and cost to be borne by the borrower).
- General terms and conditions of the loan products are mentioned below:
- Only women borrowers are eligible.
- The borrower must be a member of one JLG.
- The loan will be used for income-generating activity only.
- The household annual income of the borrower should not exceed Rs 125,000/- in a rural area and it should not exceed Rs 200,000/- in non-rural area.
- Interest Rate is according to the RBI regulations.
- The total indebtedness of the borrower should not exceed the limit allowed by MFIN, Sa-Dhan along with the RBI.
- There is no penalty for delayed payment.
- Borrowers and their spouse are covered under insurance.
- Prepayment allowed but without penalty.
- A loan is without collateral.
- A loan is repayable by weekly, fortnightly or monthly instalments at the choice of the borrower/group.
Minimum Period of Moratorium
There must be a minimum period of moratorium between the grant of the loan and the due date of the repayment of the first instalment. The moratorium shall not be less than the frequency of repayment e.g. in the case of weekly repayment, the moratorium shall not be less than one week.
Disbursement of loans including changes in terms and conditions
Any change in terms and conditions including disbursement schedule, interest rates, etc. shall be informed to the borrowers.
- The Fair Practice Code in vernacular language is displayed at its Head Office and Branch Office premises,
- A statement shall be made in vernacular language and displayed in their premises and in the passbook articulating the commitment to transparency and fair lending practices.
- The staff shall be properly trained to deal with the customers in an appropriate manner and to make necessary enquiries about the existing debt of the borrowers.
- The training to the borrowers shall be free. The field staff shall be trained to offer such training and also make the borrowers fully aware of the procedure and systems related to loans/other products.
- The effective rate of interest and the Grievance Redressal System prominently displayed in vernacular language in all its offices and the literature issued by it and also on its website.
- A declaration that the Company will be accountable for preventing inappropriate staff behaviour and timely grievance redressal shall be made in the loan agreement and also in the Fair Practice Code displayed in its office/branch premises.
- The KYC Guidelines of RBI shall be complied with. Due diligence shall be carried out to ensure the repayment capacity of the borrowers.
- All sanctioning and disbursement of loans should be done only at a central location and more than one individual should be involved in this function. The procedure for loan application shall be simplified and loan disbursements will be done within a pre-determined time.
Disclosures in loan agreement/loan card
- The loan agreement is in vernacular language.
- In the Loan Agreement the followings are disclosed:
- All the terms and conditions of the loan.
- The pricing of the loan involves only three components, viz., the interest charge, the processing charge and the actual insurance premium.
- No penalty charged on delayed payment.
- No Security Deposit/Margin is collected from the borrower.
- The borrower cannot be a member of more than one SHG/ JLG.
- The moratorium between the grant of the loan and the due date of the repayment of the first instalment.
- An assurance that the privacy of borrower data will be respected.
- The passbook reflects the following details:
- The effective rate of interest charged
- All other terms and conditions attached to the loan
- Information which adequately identifies the borrower
- Acknowledgements of all repayments including instalments received and the final discharge.
- The Grievance Redressal System and the name and contact number of the nodal officer clearly mention in the passbook.
- The Insurance facility provided with full consent of the borrowers and the related fee structure communicated in the passbook.
- All entries are made in the passbook in the vernacular language.
Non-Coercive Methods of Recovery
The Company will treat every customer with respect and dignity. We provide our microfinance services regardless of caste, creed and religion. The Company will maintain a positive bias in favour of the socio-economically vulnerable segments of society. We always maintain decency and decorum during all customer and employee interactions, are respectful of social and cultural sensitives and also avoid behaviour which may lead to any form of threat or violence.
The Company does not believe in using muscle power, abusive language, persistently bothering borrowers at odd hours or at inappropriate times such as bereavements, illness, social occasions such as marriages and births for loan recovery purpose.
The loan recovery is made only at a central designated place. Field staff shall be allowed to make recovery at the place of residence or work of the borrower only if the borrower fails to appear at a central designated place on two or more successive occasions.
For appraisal/compensation/promotion for staff, the Company gives more emphasis on areas of service and borrower satisfaction than the number of loans mobilized and recovery rate.
Internal control system
The Company is to constitute the Fair Practice Committee headed by one board member for implementation and monitoring of Fair Practice Code and Code of Conduct (adopted from sector associations-MFIN and Sa_Dhan). The Committee looks into implementation, monitoring and periodic review of Fair Practice Code and Code of Conduct throughout the organization. The Board of Directors should also provide 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 will be submitted to the Board at regular intervals.
Grievance Redressal Mechanism for Customers
A grievance can be defined as any sort of dissatisfaction that needs to be redressed to bring about the smooth functioning of the organization. Broadly, a grievance can be defined as any discontent of dissatisfaction with any aspect of the organization. It can be real or imaginary, legitimate or ridiculous, rated or unvoiced, written or oral; it must, however, find expression in some form of the other.
Discontent or dissatisfaction is not a grievance. They initially find expression in the form of a complaint. When a complaint remains unattended to and concerned feels a sense of lack of justice and fair play, the dissatisfaction grows and assumes the status of a grievance.
FAIR PRACTICES CODE FOR CUSTOMERS
- All our dealings with customers will be open, fair and ethical.
- We will treat all our customers with respect and professionalism.
- We shall explain and disclose the features of our services in a transparent and understandable manner. Further. our applications and agreements shall clearly include:
- The interest rate on loans
- Processing fee and insurance premium and
- All other terms and conditions
- We will make our best efforts to ensure that the loans we provide are within our customers’ capacity to repay.
- We will provide a receipt/acknowledgement for every payment received from a customer.
- We will regularly rotate centre leaders to restrain the disproportional influence of leaders in the group.
- We will not engage in any coercive methods to collect repayments.
- We will provide customers with a grievance redressal system to register their complaints and resolve it in a timely and fair manner.
- We respect our customers’ privacy and will treat customer information as private and confidential.
There are three formal stages in which any grievance can be redressed. At the Company, we want to make sure that customers get only the very best of service from us – service which our valued member deserves.
A VFS member may contact our branches or write to the Branch Manager explaining the details of their issues. Our Branch Manager will be glad to assist you.
If you do not receive a response within 10 days from the channels under Step 1, or, if you are not satisfied with the response received, you can escalate your complaint to our Help Desk Executive at our Corporate Office 033 66551466 (from 10am to 5pm every day except Saturday, Sunday and other Holidays)
If you are not satisfied with the response that you receive from the Branch level or channels under Step 2, or if you do not hear from us in 10 days, you may contact the Office of the Chief Nodal Officer for a speedy investigation and fair resolution of your problem. Please quote the reference number provided to you in your earlier interaction with the Company, along with your account/loan number to help us understand and address your concern.
You may write to:
Mr Subhasis Ghosh
Village Financial Services Ltd (VFSL)
Eco Space Business Park
Room No. 403, 4th Floor New Town, Rajarhat
Kolkata 700160, West Bengal
Phone: (033) 66551414 / 66551466
If you are not satisfied with the response received from Chief Nodal Officer or do not receive any response within a period of one month, please contact:
MFIN toll free help line: 1800 270 0317
If you are not satisfied with the response received from any of the above or do not receive a response from MFIN in 15 days, please contact:
The General Manager
Reserve Bank of India
Department of Non-Banking Supervision
5th Floor, 15, N. S. Road,
- The Company has installed complaints/suggestion box at all its branches at prominent places to receive written complaints.
- The Company has the Head Office address with Telephone number printed in all passbooks.
- During Group Training, discussions is made with our customers about the Grievance Redressed System and its benefits.
- The Company assures that the Customer will be treated fairly despite the grievance being lodged.
The Fair Practices Code is subject to revision based on the RBI guidelines and such revisions shall be made on a time to time basis
Last reviewed: By the Board of Directors of the Company in their meeting dated January 17, 2020