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Fair Practices Code (FPC)

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Fair Practices Code (FPC)

Fair Practices Code (FPC)

Gandra Fincorp Private Limited

Fair Practice Code

Version 1.0

Document review and approval:

Version History:

  • Introduction

Gandra Fincorp Private Limited (‘Gandra’ or ‘the Company’) is a non-deposit taking Non-Banking Financial Company (NBFC) - Investment and Credit Company registered with the Reserve Bank of India (‘RBI’). Gandra is currently categorized as base layer NBFC. The Company is engaged in the business of extending business and corporate loans.

The RBI has issued the Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025 (‘Directions’), which lay down comprehensive principles for fair treatment of customers, transparency, responsible pricing and conduct of business by NBFCs. In line with these Directions, the Board of Directors of Gandra has adopted this Fair Practices Code (‘FPC’ or ‘the Code’) to codify the minimum standards of fair, ethical and transparent practices that shall be followed by the Company while dealing with its customers. This Code outlines the principles, procedures, and responsibilities to ensure compliance with RBI directives and best practices.

This FPC shall be put up on the Company’s official website, for the information of various stakeholders.

  • Objective

The objectives of the FPC are as follows:

  • To ensure transparency and fairness in all dealings with customers by establishing clear, consistent, and ethical standards across the Company’s operations.
  • To promote trust and customer confidence by upholding fair practices and fostering reliability in the Company’s relationships with customers and other stakeholders.
  • To ensure customers are fully informed of all applicable terms and conditions, including pricing, charges, rights, and obligations, prior to entering into any transaction or contractual arrangement.
  • To promote ethical and responsible practices in loan appraisal, sanction, disbursement, servicing, and recovery, in line with regulatory requirements and industry best practices.
  • To manage and monitor customer accounts in a fair, transparent, and non-discriminatory manner, strictly in accordance with agreed terms and conditions.
  • To conduct recovery and enforcement actions, where necessary, in a professional, dignified, and lawful manner, ensuring adherence to due legal processes and respect for customer rights.
  • To establish a customer-centric framework that ensures customer protection, satisfaction, and effective grievance redressal.
  • To ensure that staff dealing with customers directly are appropriately trained to deal with the customers appropriately and in accordance with the standards of the Company.
  • To ensure full compliance with applicable RBI regulations and other statutory requirements governing fair practices for NBFCs.
  • Fair practices in loan applications and their processing
  • Communications and disclosures:
  • The Company shall ensure that all communication with borrowers is conducted in the vernacular language or in a language clearly understood by the borrower.
  • The Company shall give notice to the borrower in a vernacular language or a language as understood by the borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc.
  • Decision to recall / accelerate payment or performance under the agreement shall be in consonance with the loan agreement.
  • The Company shall ensure that changes in interest rates and charges are effected only prospectively.
  • Any increase in the EMI/ tenor or both on account of impact of change in benchmark interest rate shall be communicated to the borrower immediately through appropriate channels.
  • Loan Application:
  • Loan application form shall include necessary information which affects the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by another lender can be made, and informed decision can be taken by the borrower.
  • The loan application form shall indicate the documents required to be submitted with the application form.
  • The Company shall give acknowledgement for receipt of all loan applications. Preferably, the time frame within which loan applications will be disposed of shall also be indicated in the acknowledgement.
  • The rate of interest and the approach for gradations of risk and rationale for charging different rates of interest to different categories of borrowers shall be disclosed to the borrower or customer in the application form.
  • Loan Sanction Letter:
  • The Company shall convey in writing to the borrower in the vernacular language as understood by the borrower by means of sanction letter or otherwise, the amount of loan sanctioned along with the terms and conditions including annualised rate of interest and method of application thereof and keep the acceptance of these terms and conditions by the borrower on its record.
  • The timeline and place of return of original movable / immovable property documents shall be mentioned in the loan sanction letters.
  • The rate of interest and the approach for gradations of risk and rationale for charging different rates of interest to different categories of borrowers shall be disclosed to the borrower or customer explicitly in the sanction letter.
  • At the time of sanction, the Company shall clearly communicate to the borrowers about the possible impact of change in benchmark interest rate on the loan leading to changes in EMI and/or tenor or both.
  • The applicability or otherwise of pre-payment charges shall be clearly disclosed in the sanction letter.
  • Loan Agreement:
  • The Company shall furnish a copy of the loan agreement as understood by the borrower along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.
  • The Company shall mention the penalties charged for late repayment in bold in the loan agreement.
  • A suitable condition to effectively ensure that changes in interest rates and charges are effected only prospectively will be incorporated in the loan agreement.
  • The KFS should also be included as a summary box to be exhibited as part of the loan agreement.
  • The applicability or otherwise of pre-payment charges shall be clearly disclosed in the loan agreement.
  • Key Facts Statement (KFS)

The Company shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format given at: https://rbidocs.rbi.org.in/rdocs/content/pdfs/362MD28112025_AN1.pdf.

  • The KFS shall be written in a language understood by such borrowers.
  • Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that they have understood the same.
  • The KFS shall be provided with a unique proposal number and shall have a validity period of at least three working days for loans having tenor of seven days or more, and a validity period of one working day for loans having tenor of less than seven days.

Note: Validity period refers to the period available to the borrower, after being provided with the KFS by the Company, to agree to the terms of the loan. The Company shall be bound by the terms of the loan indicated in the KFS, if agreed to by the borrower during the validity period.

  • The KFS shall also include a computation sheet of annual percentage rate (APR), and the amortisation schedule of the loan over the loan tenor. APR will include all charges which are levied by the Company.
  • Illustrative examples of calculation of APR and disclosure of repayment schedule for a hypothetical loan are given in Annex I.
  • Charges recovered from the borrowers by the Company on behalf of third-party service providers on actual basis, such as insurance charges, legal charges etc., shall also form part of the APR and shall be disclosed separately. In all cases wherever the Company is involved in recovering such charges, the receipts and related documents shall be provided to the borrower for each payment, within a reasonable time.
  • Any fees, charges, etc. which are not mentioned in the KFS, cannot be charged by the Company to the borrower at any stage during the term of the loan, without explicit consent of the borrower.
  • The applicability or otherwise of pre-payment charges shall be clearly disclosed in the KFS.
  • Settlement of loans
  • The Company shall release all securities on repayment of all dues or on realisation of the outstanding amount of loan subject to any legitimate right or lien for any other claim they may have against borrower. If such right of set off is to be exercised, the borrower shall be given notice about the same with full particulars about the remaining claims and the conditions under which the Company is entitled to retain the securities till the relevant claim is settled/paid.
  • Release of Movable / Immovable Property Documents on Repayment / Settlement of Personal Loans
  • The Company shall release all the original movable / immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/ settlement of the loan account.
  • The borrower shall be given the option of collecting the original movable / immovable property documents either from the banking outlet / branch where the loan account was serviced or any other office of the Company where the documents are available, as per her / his preference.
  • The Company shall communicate to the borrower reasons for delay in releasing original movable / immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/ settlement of loan. In cases where the delay is attributable to the Company, it shall compensate the borrower at the rate of ₹5,000 for each day of delay.
  • In case of loss/damage to original movable / immovable property documents, either in part or in full, the Company shall assist the borrower in obtaining duplicate/certified copies of the movable / immovable property documents and shall bear the associated costs, in addition to paying compensation as indicated above. However, in such cases, an additional time of 30 days will be available to the Company to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days).

Note- The compensation provided under these directions shall be without prejudice to the rights of a borrower to get any other compensation as per any applicable law.

  • General practices when dealing with borrowers
  • The Company will not interfere in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless information, not earlier disclosed by the borrower, has been noticed).
  • The Company shall convey its consent or objection within 21 days from the date of receipt of request from the borrower for transfer of borrowal account. The company shall follow transparent contractual terms in consonance with law.
  • In the matter of recovery of loans, the Company will not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc. In order to avoid rude behavior, the Company shall ensure that the staff are adequately trained to deal with the customers in an appropriate manner.
  • The Company shall not discriminate in extending products and facilities including loan facilities to physically / visually challenged applicants on grounds of disability. All branches of the Company shall render all possible assistance to such persons for availing of the various business facilities. Further, the Company shall ensure redressal of grievances of persons with disabilities under the Grievance Redressal Mechanism already set up by them.
  • The Company shall strictly ensure that its staff or its agents do not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude upon the privacy of the debtors' family members, referees and friends, sending inappropriate messages either on mobile or through social media, making threatening and/ or anonymous calls, persistently calling the borrower and/ or calling the borrower before 8:00 a.m. and after 7:00 p.m. for recovery of overdue loans, making false and misleading representations, etc.
  • The Company shall include a suitable module containing the rights of persons with disabilities guaranteed to them by the law and international conventions, in all the training programmes conducted for their employees at all levels.
  • Regulation of excessive interest charged
  • The Company shall adopt a board-approved interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances.
  • The rates of interest and the approach for gradation of risks shall also be made available on the website of the companies or published in the relevant newspapers. The information published on the website or otherwise published shall be updated whenever there is a change in the rates of interest.
  • The rate of interest must be annualised rate so that the borrower is aware of the exact rates that would be charged to the account.
  • The Company shall ensure that the interest and other charges on loans and advances by the Company are aligned with normal financial and industry practices.
  • Penal Charges in loan accounts
  • Penalty, if charged, for non-compliance of material terms and conditions of loan contract by the borrower shall be treated as ‘penal charges’ and shall not be levied in the form of ‘penal interest’ that is added to the rate of interest charged on the advances.
  • There shall be no capitalisation of penal charges, i.e., no further interest computed on such charges. However, this will not affect the normal procedures for compounding of interest in the loan account. Therefore, the Company may charge interest on unpaid interest (including on unpaid EMI) at the contracted rate of interest till the date of remediation, and not at the penal rate of interest.
  • The Company shall not introduce any additional component to the rate of interest and ensure compliance with these guidelines in both letter and spirit.
  • The Company shall formulate a Board approved policy on penal charges or similar charges on loans.
  • The quantum of penal charges shall be reasonable and commensurate with the non-compliance of material terms and conditions of loan contract without being discriminatory within a particular loan / product category.
  • The quantum and reason for penal charges shall be clearly disclosed by the Company to the customers upfront in the loan agreement and Most Important Terms & Conditions/ Key Fact Statement as applicable, in addition to being displayed on the Company’s official website under Interest rates and Service Charges. Only providing a reference to the schedule of penal charges displayed on the website of the Company in the sanction letter and loan agreement shall not suffice.
  • Whenever reminders for non-compliance of material terms and conditions of loan are sent to borrowers, the applicable penal charges shall be communicated. Further, any instance of levy of penal charges and the reason thereof shall also be communicated.
  • In the case of existing loans, the switchover to new penal charges regime shall be ensured on next review or renewal date.

Notes:

(i) The material terms and conditions shall be defined, if not already done, as per the credit policy of the NBFC and they may vary from one category of loan to another, and also, from lender to lender based on their own assessment.

(ii) Default in repayment by the borrower is also a type of non-compliance of material terms and conditions of loan repayment contract by the borrower and penalty, if charged, for such default shall only be levied in the form of penal charges and not penal interest. Such penal charges shall be reasonable and levied by the lenders only on the amount under default in a non-discriminatory manner as per their Board approved policy. Further, it shall be ensured that there is no capitalization of the penal charges i.e., no further interest computed on such charges.

(iii) Additional / fresh penal charges cannot be levied on the earlier outstanding amount of penal charges.

(iv) The Company shall follow the instructions and clarifications, if any, issued by Central Board of Indirect Taxes & Customs (CBIC) with regard to applicability of GST on penal charges.

(v) The penal charges can be different within the same product category depending upon the amount of loan and the Company may adopt a suitable structure of penal charges subject to adherence to the above stipulations. The structure of penal charges within a particular loan / product category shall have to be uniform irrespective of the constitution of the borrower.

(vi) Although no upper limit / cap for penal charges has been prescribed, the Company, while formulating its Board approved policy on penal charges, should keep in mind that the intent of levying penal charges is essentially to inculcate a sense of credit discipline and such charges are not meant to be used as a revenue enhancement tool.

  • Pre-payment charges on loans
  • For all floating rate loans granted, pre-payment charges, if any, shall be as per the approved policy of the Company. However, in case of term loans, pre-payment charges, if levied by the Company, shall be based on the amount being prepaid. In case of cash credit/ overdraft facilities, pre-payment charges on closure of the facility before the due date shall be levied on an amount not exceeding the sanctioned limit.
  • The Company shall not levy any charges where pre-payment is effected at the instance of the Company.
  • No pre-payment charges which have not been disclosed as specified herein shall be charged by the Company.
  • The Company shall not levy any charges / fees retrospectively at the time of pre-payment of loans, which were waived off earlier by the Company.
  • Reset of Floating Interest Rate for equated instalment-based loans
  • At the time of sanction, the Company shall clearly communicate to the borrowers about the possible impact of change in benchmark interest rate on the loan leading to changes in EMI and/or tenor or both. Subsequently, any increase in the EMI/ tenor or both on account of the above shall be communicated to the borrower immediately through appropriate channels.
  • At the time of reset of interest rates, the Company may, at its option, provide a choice to the borrowers to switch over to a fixed rate as per its Board approved policy on Interest Rate and Charges.
  • The borrowers shall also be given the choice to opt for (i) enhancement in EMI or elongation of tenor or for a combination of both options; and, (ii) to prepay, either in part or in full, at any point during the tenor of the loan. Levy of foreclosure charges/ pre-payment penalty shall be subject to extant instructions.

Note: Whenever there is a reset of interest rates for an entire class of borrowers in a particular loan category, say home loan, due to increase in the reference benchmark; the Company shall provide the following options to the borrowers:

  • Either enhancement in EMI or elongation of number of EMIs, keeping the EMI unchanged or a combination of both options;
  • Switch to fixed interest rate for the remaining portion of the loan, where such an option is provided by the bank; and
  • To prepay, either in part or in full, at any point during the residual tenor of the loan.
  • All applicable charges for switching of loans from floating to fixed rate and any other service charges/ administrative costs incidental to the exercise of the above options shall be transparently disclosed in the sanction letter and also at the time of revision of such charges/ costs by the Company from time to time. The applicable charges shall be as approved by the Board and shall be displayed on the Company’s official website.
  • The Company shall ensure that the elongation of tenor in case of floating rate loan does not result in negative amortisation.
  • The Company shall share / make accessible to the borrowers, through appropriate channels, a statement at the end of each quarter which shall at the minimum, enumerate the principal and interest recovered till date, EMI amount, number of EMIs left and annualized rate of interest / APR for the entire tenor of the loan. The Company shall ensure that the statements are simple and easily understood by the borrower.
  • Review Of the Policy

The Board of Directors shall review this Policy annually or on a need-basis i.e., in the event of change in regulatory framework or for business or operational need (whichever is earlier). Such updates / changes to the Policy will be communicated to the relevant staff /personnel (both in-house or outsourced) and relevant stakeholders across the Company.

Notwithstanding anything contained in this FPC, in case of any contradiction of the provision of this FPC with any existing laws, rules, regulations, guidelines, or modification thereof or enactment of a new applicable law, the provisions under such laws, rules, regulations, guidelines, or enactment shall prevail over this FPC.

Annex I

(Illustrative examples of calculation of APR and disclosure of repayment schedule for a hypothetical loan)

(i) Illustration for computation of APR for Retail and MSME loans

(ii) Illustrative Repayment Schedule under Equated Periodic Instalment for the above-mentioned hypothetical loan