Fair Practices Code Introduction
- The Reserve Bank of India (“RBI”) has vide its Master Directions – NBFC-P2P Lending Platform (Reserve Bank) Directions, 2017 dated October 4, 2017 has directed every Non-Banking Financial Company Peer to Peer Lending Platform (“NBFC-P2P”) to implement a Fair Practices Code.
- Accordingly, to provide to the participants an effective overview of practices followed by the Company in respect of financial facilities and services offered by the Company and to promote good, fair, transparent and trustworthy practices to its participants, the Board of Directors, being a peer-to-peer lending platform have approved this Fair Practices Code (“Code”).
Key Principles of the Code
- Transparency: The Platform shall ensure transparency in its operations, providing clear and accurate information to borrowers and lenders about the terms, fees and risks associated with P2P lending.
- Non-discrimination: The Platform shall treat all participants, including borrowers and lenders, fairly and without discrimination, ensuring equal access to its services.
- Responsible lending: The Platform shall conduct thorough due diligence on borrowers, assess their creditworthiness and only facilitate loans that borrowers can reasonably afford to repay.
- Privacy and data protection: The Platform shall maintain strict confidentiality of borrower and lender information, adhering to data protection laws and regulations.
- Grievance redressal: The Platform shall establish a transparent and effective grievance redressal mechanism to address complaints from borrowers, lenders and other stakeholders.
- Prevention of unfair practices: The Platform shall take measures to prevent fraudulent and unfair practices, including anti-money laundering and know-your-customer checks.
Code For Lenders
Lenders are expected to follow the following Fair Practice Code for participating on the platform.
Lenders shall read and understand the Platform’s policy and terms and conditions before registering.
Lenders have to submit explicit declaration stating that they have understood all the risks associated with the lending transactions and that the Platform does not assure return of principal/payment of interest and there exists a likelihood of loss of entire principal in case of default by a Borrower.
The Lender investing more than Rs. 10,00,000/- across P2P platforms shall produce a certificate to P2P platforms from a practicing Chartered Accountant certifying minimum net worth of Rs. 50,00,000/-.
The Lenders shall submit declaration that their exposure to a Borrower, across all P2Ps is not exceeding Rs. 50,000/-.
The personal identity and contact details of the Lenders shall not be disclosed to Borrowers by the Platform.
Lenders shall have access to comprehensive information about Borrowers, loan terms, interest rates and associated risks before making lending decisions.
Lenders shall refrain from engaging in misleading or false advertising practices and shall provide accurate representations of their loan offers.
Lenders shall refrain from engaging in any fraudulent, deceptive, or unfair practices.
Lenders shall conduct thorough due diligence on Borrowers before extending loans. This includes assessing the borrower’s creditworthiness, repayment capacity and financial stability.
Lenders shall make lending decisions based on objective and fair criteria and avoid discriminatory practices.
Lenders shall respect the confidentiality of Borrower’s information and shall not disclose sensitive borrower details to third parties without explicit consent.
Lenders shall adhere to data protection laws and regulations to safeguard Borrower information.
Lenders shall adhere to the grievance redressal mechanism provided by the Platform for resolving any issues or grievances.
Lenders shall cooperate with the Platform’s Grievance Redressal Officer (GRO) and provide necessary information to facilitate grievance resolution.
Lenders shall follow ethical and professional conduct while engaging in P2P lending activities.
Lenders shall monitor their lending portfolio regularly and take necessary actions in case of delinquencies or defaults.
Lenders shall comply with all applicable laws, regulations and guidelines related to P2P lending.
Lenders are encouraged to educate themselves about the P2P lending process, risks and best practices to make informed lending decisions.
The Platform will not provide any assurance for the recovery of loans.
Code For Borrowers
Borrowers are expected to follow the following Fair Practice Code for participating on the platform:
Borrowers should read and understand the Company Policy and Terms and Conditions before registering.
Borrowers will not provide any information which is incorrect or materially impairs the decision of the Company to register him / her on the platform.
Borrowers shall provide accurate and complete information during the loan application process.
The borrowers shall submit explicit consent to access their credit information.
Borrowers shall know that the information about the loan and the loan performance will also be shared with the credit bureaus / Credit Information Companies which may affect their credit score.
The Borrowers have to submit declaration that their outstanding loan across all P2P platforms including the proposed loan with the Company is less than Rs. 10,00,000/-.
The Borrower shall be provided with a copy of the Loan Agreement a copy of each of the enclosures referred to in the Loan Agreement to the borrowers at the time when the loan is sanctioned/ disbursed.
Borrowers are encouraged to seek clarification about any aspect of the loan agreement before accepting the loan.
The Borrower shall be informed about the amount of loan approved along with the terms and conditions including rate of interest (per annum).
Borrowers shall be aware that information like details about them including personal identity, required loan amount, interest rate sought will be shared with the Lenders.
Borrowers shall exercise responsibility when borrowing funds through the Platform, ensuring that the loan amount is affordable and can be repaid within the agreed-upon time frame.
The Borrowers shall be treated fairly and without discrimination, irrespective of their gender, race, religion, or background.
Borrowers’ personal and financial information shall be kept confidential and protected in accordancewith applicable data protection laws and regulations.
Borrowers shall adhere to the repayment schedule as agreed upon in the loan agreement.
Any changes to the repayment schedule or difficulties in making repayments shall be promptly communicated to the Platform.
Borrowers shall not engage in fraudulent activities or provide false information to the Platform or any other participant in the P2P lending process.
Borrowers shall adhere to the grievance redressal mechanism provided by the Platform for resolving any issues or grievances.
Borrowers shall cooperate with the Platform’s Grievance Redressal Officer (GRO) and provide necessary information to facilitate grievance resolution.
The Platform shall not engage in any form of coercion, harassment or undue pressure to influence borrowers’ decisions or repayment behaviour.
Borrowers shall adhere to the code of conduct prescribed by the Platform, which includes responsible borrowing practices and honest interactions with other participants.
Borrowers shall maintain open communication with the Platform and promptly inform about any changes in contact information or circumstances that may affect the loan agreement.
Code For P2P Lending Platform
- The Borrower shall be given a loan sanction letter in vernacular language, or a language as understood by the Borrower which shall include the details of the loan such as amount sanctioned, annualised interest rate, method of application thereof and any other terms and conditions.
- The Company shall clearly communicate the terms and conditions of transacting on the Platform to all Participants that come on to the Platform.
- The Company shall ensure that any information relating to the participants received by it is not disclosed to any third party without the consent of the participants. This restriction shall not apply in case where the Company is required to provide such information relating to a Participant, by law or under an order of a government, statutory or regulatory authority.
- In the matter of recovery of loans, the Company shall ensure that the staff are adequately trained to deal with the participants in an appropriate manner and shall not resort to harassment viz; persistently bothering the borrowers at odd hours, use of coercion for recovery of loans, etc.
- The Company to provide Key Fact Statement (KFS) to the Borrower before the execution of the contract in standardised format.
- The KFS, apart from other necessary information, shall contain details of Annual Percentage Rate (APR), terms and conditions of recovery mechanism, details of Grievance Redressal Officer designated specifically to deal with grievances.
- The Platform shall provide clear and accurate information to borrowers and lenders about the terms, fees, risks and benefits associated with P2P lending.
- All relevant information shall be made available to participants in a manner that is easy to understand.
- The Platform shall treat all participants, including borrowers and lenders, fairly and without discrimination, regardless of their gender, race, religion, or background.
- Participants’ personal and financial information shall be handled with utmost confidentiality and in compliance with applicable data protection laws and regulations.
- The Platform shall conduct thorough due diligence on Borrowers by assessing their creditworthiness and ability to repay loans.
- Lenders shall be provided with relevant Borrower information to make informed lending decisions.
- The credit scores arrived at by the platform is based on the financial behaviour of a Borrower and does not include factors such as gender, race or religion.
- The Platform shall encourage responsible borrowing and lending practices, ensuring that borrowers can reasonably afford to repay the loans.
- Lenders shall be encouraged to diversify their investments to manage risks effectively.
- The Platform shall determine interest rates for loans based on market conditions and risk assessment, ensuring that rates are fair and competitive.
- The Platform shall take measures to prevent fraudulent activities, including anti-money laundering and know-your-customer checks on participants.
- The Platform shall establish a transparent and efficient grievance redressal mechanism for addressing complaints from borrowers, lenders and other stakeholders.
- The Platform shall not engage in any form of coercion, harassment or unethical practices to influence participants’ decisions or behaviours.
- The Platform shall communicate regularly with participants, providing updates on loan performance, regulatory changes and any relevant information.
Code for Outsourced Staff
- Outsourced staff shall conduct themselves with professionalism, integrity and transparency at all times while representing the Platform.
- Outsourced staff shall treat all stakeholders, including borrowers, lenders, customers and colleagues, with respect and fairness, irrespective of their background or position.
- Outsourced staff shall maintain strict confidentiality of all customer and Platform information, adhering to data protection laws and regulations.
- Outsourced staff shall adhere to all Platform’s policies, procedures and guidelines, as well as relevant laws and regulations governing P2P lending.
- Outsourced staff shall not engage in any form of discrimination or bias based on gender, race, religion or any other characteristic.
- Outsourced staff shall avoid situations that may lead to conflicts of interest and shall promptly disclose any potential conflicts to the Platform.
- Outsourced staff shall communicate professionally and courteously with all stakeholders, ensuring clarity and accuracy in all interactions.
- Outsourced staff shall promptly escalate and communicate any grievances or concerns to the appropriate authorities within the Platform.
- Outsourced staff shall not engage in any form of unethical behaviour, including bribery, fraud, harassment or any action that may harm the Platform’s reputation.
- The Platform shall provide necessary training and resources to outsourced staff to ensure their understanding of P2P lending operations, policies and regulations.