Code of Conduct

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Preface, Objective and Applicability

Preface

FriendLoan seeks to create social benefit and promote financial inclusion by providing financial services to low income and Mid income group / individuals. The Company is a NBFC registered with Reserve Bank of India (RBI). The Company follows various guidelines issued by Reserve Bank of India (RBI) and has also adopted Industry Code of Conduct.

Objective
  • Promote and strengthen ethical Digital lending movement in the country by bringing low and Mid income clients to mainstream financial sector.
  • Build progressive, sustainable, and client-centric systems and practices to provide a range of financial services (consistent with regulation) to clients.
  • Promote cooperation and coordination among themselves and other agencies in order to achieve higher operating standards and avoid unethical competition in order to serve clients better.
Applicability

This Code applies to the following activities:

  • Providing credit services to clients, individually or in groups.
  • Recovery of credit provided to clients.
  • Formation of any type of community collectives including self-help groups, joint liability groups and their federations.
  • Business development services including marketing of products or services made or extended by the eligible clients or for any other purpose for the welfare and benefit of clients.

Core Values of Company

INTEGRITY

To provide low-income clients – women and their families, with access to financial services that are client focused and designed to enhance their well-being, and are delivered in a manner that is ethical, dignified, transparent, equitable, and cost-effective.

QUALITY OF SERVICE
  • To ensure quality services to clients, appropriate to their needs, and delivered efficiently in a convenient and timely manner.
  • To maintain high standards of professionalism based on honesty, non-discrimination, and customer-centricity.
TRANSPARENCY
  • To provide complete and accurate information to clients regarding all products and services offered.
  • To create awareness and enable clients and all other stakeholders to understand the information provided with respect to financial services offered and availed.
FAIR PRACTICES
  • To ensure that clients are protected against fraud and misrepresentation, deception or unethical practices.
  • To ensure that all practices related to lending and recovery of loans are fair and maintain respect for the client’s dignity and with an understanding of the client’s vulnerable situation.
PRIVACY OF CLIENT INFORMATION

To safeguard the personal information of clients, allowing disclosures and exchange of relevant information with authorized personnel only, and with the knowledge and consent of clients.

INTEGRATING SOCIAL VALUES INTO OPERATIONS
  • To ensure high standards of governance and management.
  • To monitor and report social as well as financial data.
  • FEEDBACK and Grievance Redressal MECHANISM:
  • To provide clients formal and informal channels for feedback and suggestions.
  • To consistently assess the impact of services in order to enhance competencies and serve clients better.
  • To provide a formal grievance redressal mechanism for clients.

Policy

In order to adhere to the core values of the Company, the Code of Conduct, as mentioned below, must be abided by.

INTEGRITY AND ETHICAL BEHAVIOUR
  • We shall design appropriate policies and operating guidelines to treat clients and employees with dignity.
  • We shall incorporate a 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.
  • Educate clients on the Code of Conduct and its implementation.
TRANSPARENCY
  • 1. We shall disclose all terms and conditions to the client for all services offered. The 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 schedule
  • We must 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, we must 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
  • We must communicate in writing, the charges levied for all financial services rendered. Fees on non-credit products/services will be collected only with the prior declaration to the client.
  • We must declare all interest and fees payable as an all-inclusive Annual Percentage Rate (APR) and equivalent monthly rate.
  • We shall follow RBI’s guidelines with respect to interest charges and security deposits.
  • 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.

CLIENT PROTECTION

Fair Practices
  • We must ensure that the provision of services to eligible clients is as per RBI guidelines.
  • We must 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
Avoiding Over-indebtedness
  • We must conduct proper due diligence as per 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.
  • We must 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
  • We must have clearly defined guidelines for employee interactions with clients.
  • We must ensure that all Staff and persons acting on our behalf
    • Use courteous language, maintain decorum, and are respectful of cultural sensitivities during all interactions with clients.
    • DO NOT indulge 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.
  • We must provide a valid receipt (in whatever form decided by the Company) for each and every payment received from the borrower.
  • We must have a detailed Board approved process for dealing with clients, at each stage of default.
  • We must not collect shortfalls in collections from employees and must categorically denounce this practice. An exception can however be made in proven cases of fraud by employees
Privacy of client information

We must 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 Company.
  • 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)

GOVERNANCE

We must incorporate a formal governance system that is transparent and professional, and adopts the following best practices of corporate governance:

  • We agree to observe high standards of governance by inducting persons with a good and sound reputation as members of the Board of Directors/Governing body.
  • We agree to endeavor to induct independent persons to constitute at least 1/3rd of the Governing Board, and the Board be actively involved in all policy formulations and other important decisions.
  • We must ensure transparency in the maintenance of books of accounts and reporting/presentation and disclosure of financial statements by qualified auditor/s.
  • We must put in our best efforts to follow the Audit and Assurance Standards issued by the Institute of Chartered Accountants of India (ICAI).
  • We must 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.

RECRUITMENT

This code covers all Company staff.

  • 1. As a matter of free and fair recruitment practice, there will be no restriction on the hiring of staff from other NBFC’s by legitimate means in the public domain like general recruitment advertisements in local newspapers, web advertisements, walk-in interviews, etc.
  • Whenever we will recruit from another NBFC, it will be mandatory to seek a reference check from the previous employer. The reference check will be sought from the current employer only after an offer is made and an offer letter is issued to the prospective employee.
  • We must honor a one-month notice period from an outgoing employee.
  • We shall not recruit an employee of another NBFC / Organisation, irrespective of the grade/level of the employee, without the relieving letter from the previous employer. An exception can however be made in instances where the previous employer fails to respond to the reference check request within 30 days. We must 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, except in proven cases of fraud or gross misconduct by the employee.

CLIENT EDUCATION

  • We must have a dedicated process to raise clients’ awareness of the options, choices and responsibilities vis-à-vis financial products and services available.
  • New clients must be informed about the organization’s policies and procedures to help them understand their rights as borrowers.
  • We must ensure regular checks on client awareness and understanding of the key terms and conditions of the products/ services offered / availed.

DATA SHARING

We 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

  • We must establish dedicated feedback and grievance redressal mechanisms to correct any error and handle/receive complaints speedily and efficiently.
  • We must inform clients about the existence and purpose of these mechanisms and how to access them.
  • We must 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.
  • We will ensure to 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 us into their complaint, they shall be notified of their right to refer the matter to the grievance redressal mechanism established by the Industry Associations