Fair Practice Code

1. APPLICATION OF THE CODE

The code shall apply to all the products and services offered by VHFCL, its subsidiaries and Digital Lending Platforms (self-owned and/or under an outsourcing arrangement) across the counter, over the phone, by post, through interactive electronic devices, on the internet or by any other method.

2. APPLICATIONS FOR LOANS AND THEIR PROCESSING

1. All communications to the borrower shall be in the vernacular language or a language as understood by the borrower.
2. VHFCL shall transparently disclose to the borrower all information about fees/ charges payable for processing the loan application, the amount of fees refundable if the loan amount is not sanctioned/ disbursed, pre-payment options and charges, if any, penal interest/ penalty for delayed repayment, if any, conversion charges for switching loan from fixed to floating rates or vice-versa, the existence of any interest reset clause and any other matter which affects the interest of the borrower. In other words, VHFCL shall disclose ‘all in cost’ inclusive of all charges involved in the processing/ sanctioning of loan applications in a transparent manner. It should also be ensured that such charges/ fees are non-discriminatory.
3. Loan application forms shall include necessary information which affects the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by other HFCs can be made and informed decision can be taken by the borrower. The loan application form may indicate the list of documents required to be submitted with the application form.
4. VHFCL shall devise a system of giving acknowledgement for receipt of all loan applications. Preferably, the time frame within which loan applications will be disposed should also be indicated in the acknowledgement.

3. LOAN APPRAISAL, TERMS/CONDITIONS AND COMMUNICATION OF REJECTION OF LOAN APPLICATION

1. Normally all particulars required for processing the loan application shall be collected by the VHFCL at the time of application. In case it needs any additional information, the customer shall be told immediately that he would be contacted again.
2. VHFCL shall convey in writing to the borrower in the vernacular language or a language as understood by the borrower by means of sanction letter or otherwise, the amount of loan sanctioned along with all terms and conditions including annualized rate of interest, method of application, EMI Structure, prepayment charges, penal interest (if any) and keep the written acceptance of these terms and conditions by the borrower on its record.
3. VHFCL shall mention the penal interest charged for late repayment in bold in the loan agreement.
4. VHFCL shall invariably furnish a copy of the loan agreement along with a copy of each of the enclosures quoted in the loan agreement to every borrower at the time of sanction/ disbursement of loans, against acknowledgement.
5. If VHFCL cannot provide the loan to the customer, it shall communicate in writing the reason(s) for rejection.

4. DISBURSEMENT OF LOANS INCLUDING CHANGES IN TERMS AND CONDITIONS and 30 Release of Movable/ Immovable Property Documents on Repayment/ Settlement of Loans

1. VHFCL shall ensure that disbursement should be made in accordance with the disbursement schedule given in the Loan Agreement/ Sanction Letter.
2. VHFCL shall give notice to the borrower in the vernacular language or a language as understood by the borrower of any change in the terms and conditions including disbursement schedule, interest rates, penal interest (if any), service charges, prepayment charges, other applicable fees/ charges etc. VHFCL shall also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard is incorporated in the loan agreement
3. If such change is to the disadvantage of the customer, he/ she may within 60 days and without notice close his/ her account or switch it without having to pay any extra charges or interest.
4. VHFCL ensures that the decision to recall/ accelerate payment or performance under the agreement or seeking additional securities, should be in consonance with the loan agreement.
5. VHFCL shall release all securities on repayment of all dues or on realization of the outstanding amount of loan subject to any legitimate right or lien for any other claim VHFCL 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 VHFCL is entitled to retain the securities till the relevant claim is settled/ paid.
6. VHFCL shall release all movable/ immovable property documents upon receiving full repayment and closure of loan account
   1. Release of Movable/ Immovable Property Documents
      1. VHFCL 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
      2. The borrower shall be given the option of collecting the original movable/ immovable property documents either from the branch where the loan account was serviced or any other office of the HFC where the documents are available, as per her/ his preference
      3. The timeline and place of return of original movable/ immovable property documents shall be mentioned in the loan sanction letters issued on or after the effective date
      4. In order to address the contingent event of demise of the sole borrower or joint borrowers,VHFCL shall have a well laid out procedure for return of original movable/ immovable property documents to the legal heirs. Such procedure shall be displayed on the website of the HFCs along with other similar policies and procedures for customer information.
   2. Compensation for delay in release of Movable/ Immovable Property Documents:
      1. In case of delay in releasing of original movable/ immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/ settlement of loan,VHFCL shall communicate to the borrower reasons for such delay. In case where the delay is attributable to VHFCL, it shall compensate the borrower at the rate of ₹5,000/- for each day of delay.
      2. In case of loss/ damage to original movable/ immovable property documents, either in part or in full,VHFCL 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 at sub-paragraph (i) above. However, in such cases, an additional time of 30 days will be available to VHFCL to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days).
      3. 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.

5. RESPONSIBILITY OF BOARD OF DIRECTORS

1. The Board of Directors of VHFCL has laid down the appropriate grievance redressal mechanism within the organization to resolve complaints and grievances. The mechanism ensures that all disputes arising out of the decisions of lending institution’s functionaries are heard and disposed of at least at the next higher level.
2. The Board of Directors of VHFCL shall 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 is submitted to the Board at regular intervals.

6. COMPLIANTS AND GRIEVANCE REDRESSAL

1. VHFCL have a system and a procedure for receiving, registering and disposing of complaints and grievances in each of its offices, including those received on-line. Our Grievance Mechanism is as follows: -

Stage 1

Stage 2

Grievance Officer

Mr. Manu Mahajan & Ms. Ankita Gupta

Email us at	grievance.officer@vastuhfc.com
Call us at	022-35286712
Write to us at the below-mentioned address:	Vastu Housing Finance Corporation Limited A203, Navbharat Estates, Barrister Nath Pai Marg, Azad Nagar, Sewri, Mumbai, Maharashtra 400015

Stage 3

Online Portal	https://grids.nhbonline.org.in
Write to us at the below-mentioned address:	Department of Regulation and Supervision (Complaint Redressal Cell) 4th Floor, Core 5-A, India Habitat Centre Lodhi Road, New Delhi110003

1. If a complaint has been received in writing from a customer, VHFCL shall endeavor to send him/ her an acknowledgement/ response within a week. The acknowledgement shall contain the name & designation of the official who will deal with the grievance. If the complaint is relayed over phone at VHFCL designated telephone helpdesk or customer service number, the customer shall be provided with a complaint reference number and be kept informed of the progress within a reasonable period of time.
2. After examining the matter, VHFCL shall send the customer its final response or explain why it needs more time to respond and shall endeavor to do so within six weeks of receipt of a complaint and he/ she should be informed how to take his/ her complaint further if he/ she is still not satisfied.
3. VHFCL has publicize its grievance redressal procedure (e-mail id and other contact details at which the complaints can be lodged, turnaround time for resolving the issue, matrix for escalation, etc.) for lodging the complaints by the aggrieved borrower and ensure specifically that it is made available on its website.VHFCL has clearly display in all its offices/ branches and on the website that in case the complainant does not receive response from the company within a period of one month or is dissatisfied with the response received, the complainant may approach the Complaint Redressal Cell of National Housing Bank by lodging its complaints online on the website of NHB or through post to NHB, New Delhi.

7. LANGUAGE AND MODE OF COMMUNICATING FAIR PRACTICE CODE

1. Fair Practices Code based on the directions outlined hereinabove shall be put in place by VHFCL with the approval of their Boards.
2. The same shall be put up on VHFCL website, for the information of various stakeholders.

8. REGULATION OF EXCESSIVE INTEREST CHARGED BY HFCs

1. The Board of VHFCL has adopted an 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 rate of interest and the approach for gradation of risk and rationale for charging different rate of interest to different categories of borrowers shall be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter. The Board of VHFCL shall also have clearly laid down policy for penal interest/ charges (if any).
2. The rates of interest and the approach for gradation of risks, and penal interest (if any) shall also be made available on the website of the companies or published in the relevant newspapers. The information published in the website or otherwise published shall be updated whenever there is a change in the rates of interest.
3. The rate of interest and penal interest (if any) must be annualized rate so that the borrower is aware of the exact rates that would be charged to the account
4. Instalments collected from borrowers shall clearly indicate the bifurcation between interest and principal

9. EXCESSIVE INTEREST CHARGED BY HFCs

1. VHFCL shall lay out appropriate internal principles and procedures in determining interest rates and processing and other charges (including penal interest, if any). In this regard the directions in the Fair Practices Code about transparency in respect of terms and conditions of the loans are to be kept in view. VHFCL to put in place an internal mechanism to monitor the process and the operations so as to ensure adequate transparency in communications with the borrowers.
2. Penal Charges in Loan Accounts
   1. 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
   2. VHFCL shall not introduce any additional component to the rate of interest and ensure compliance to these guidelines in both letter and spirit.
   3. VHFCL shall formulate a Board approved policy on penal charges or similar charges on loans, by whatever name called.
   4. The quantum of penal charges shall be reasonable and commensurate with the noncompliance of material terms and conditions of loan contract without being discriminatory within a particular loan / product category
   5. The penal charges in case of loans sanctioned to ‘individual borrowers, for purposes other than business’, shall not be higher than the penal charges applicable to non-individual borrowers for similar non-compliance of material terms and conditions.
   6. The quantum and reason for penal charges shall be clearly disclosed by VHFCL to the customers in the loan agreement and most important terms & conditions
   7. 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 therefor shall also be communicated
3. Reset of Floating Interest Rate on Equated Monthly Instalments (EMI)
   1. At the time of sanction of EMI based floating rate ,VHFCL shall take into account the repayment capacity of borrowers to ensure that adequate headroom/ margin is available for elongation of tenor and/ or increase in EMI, in the scenario of possible increase in the external benchmark rate/ interest rates during the tenor of the loan.In order to address these concerns,VHFCL has put in place an appropriate policy framework meeting the following requirements for implementation and compliance:
      1. At the time of sanction,VHFCL shall clearly communicate to the borrowers about the possible impact of change in 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.
      2. At the time of reset of interest rates, VHFCL shall provide the option to the borrowers to switch over to a fixed rate as per their Board approved policy. The policy, inter alia, may also specify the number of times a borrower will be allowed to switch during the tenor of the loan.
      3. 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.
      4. 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 VHFCL from time to time.
      5. VHFCL shall ensure that the elongation of tenor in case of floating rate loan does not result in negative amortisation.
      6. VHFCL 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 / Annual Percentage Rate (APR) for the entire tenor of the loan.VHFCL shall ensure that the statements are simple and easily understood by the borrower.
   2. Apart from the equated monthly instalment loans, these instructions would also apply, mutatis mutandis, to all equated instalment based loans of different periodicities.

10. ADVERTISING, MARKETING AND SALES

VHFCL shall: -

1. Ensure that all advertising and promotional material is clear, and factual.
2. In any advertising in any media and promotional literature that draws attention to a service or product and includes a reference to an interest rate, VHFCL shall also indicate whether other fees and charges will apply and that full details of the relevant terms and conditions are available on request or on the website.
3. VHFCL shall provide information on interest rates, common fees and charges (including penal interest, if any) through putting up notices in their branches; through telephone or help-lines; on the company’s website; through designated staff/ help desk; or providing service guide/ tariff schedule.
4. If VHFCL avail of the services of third parties for providing support services, VHFCL shall require that such third parties handle customer’s personal information (if any available to such third parties) with the same degree of confidentiality and security as VHFCL would.
5. VHFCL may, from time to time, communicate to customer’s various features of their products availed by them. Information about their other products or promotional offers in respect of products/ services, may be conveyed to customers only if he/ she has given his/ her consent to receive such information/ service either by mail or by registering for the same on the website or on customer service number.
6. VHFCL shall apply/prescribe the code of conduct to their Direct Selling Agents/Direct Marketing Agents, if any, whose services are availed to market products/services which amongst other matters require them to identify themselves when they approach the customer for selling products personally or through phone.
7. In the event of receipt of any complaint from the customer that VHFCL representative/ courier or DSA has engaged in any improper conduct or acted in violation of this Code, appropriate steps shall be initiated to investigate and to handle the complaint and to make good the loss.

11. GUARANTORS

VHFCL shall inform the following information to the person considering to be a guarantor to a loan,

1. His/ her liability as guarantor;
2. the amount of liability he/ she will be committing him/herself to the company;
3. circumstances in which VHFCL will call on him/her to pay up his/ her liability;
4. whether VHFCL has recourse to his/her other monies in the company if he/ she fail to pay up as a guarantor;
5. whether his/her liabilities as a guarantor are limited to a specific quantum or are they unlimited; and
6. time and circumstances in which his/ her liabilities as a guarantor will be discharged as also the manner in which VHFCL will notify him/ her about this.
7. In case the guarantor refuses to comply with the demand made by the creditor/ lender, despite having sufficient means to make payment of the dues, such guarantor would also be treated as a willful defaulter.
8. VHFCL shall keep him/her informed of any material adverse change/s in the financial position of the borrower to whom he/ she stands as a guarantor.

12. PRIVACY AND CONFIDENTIALITY

1. All personal information of customers, both present and past, shall be treated as private and confidential and shall be guided by the following principles and policies.
2. VHFCL shall not reveal information or data relating to customer accounts, whether provided by the customers or otherwise, to anyone, including other companies/ entities in their group, other than in the following exceptional cases:
   1. If the information is to be given by law.
   2. If there is a duty towards the public to reveal the information.
   3. If the VHFCL’s interests require them to give the information (for example, to prevent fraud). However, it should not be used as a reason for giving information about customer or customer accounts (including customer name and address) to anyone else, including other companies in the group, for marketing purposes.
   4. If the customer asks the VHFCL to reveal the information, or with the customer’s permission.
   5. If VHFCL is asked to give a reference about customers, they shall obtain his/ her written permission before giving it.
3. The customer shall be informed the extent of his/ her rights under the existing legal framework for accessing the personal records that an HFC holds about him/ her.
4. VHFCL shall not use customer’s personal information for marketing purposes by anyone including HFCs, unless the customer specifically authorizes them to do so.