Fair Practice Code
We at Creditree, treat all our clients in a fair, ethical and unbiased manner. The Fair Practice Code (FPC) as per RBI guidelines has been placed before the Board at their meeting and thereby approved, the same has been displayed at all offices in vernacular language. The Fair Practice Code delineates that
Creditree Shall adhere to the below mentioned RBI Guidelines
- All communications to the borrower are to be made in the vernacular language or in a language understood by the borrower.
- The Loan shall be approved after checking the eligibility of the application and a legal agreement shall be entered with the Borrower.
- The agreement shall include all information about the borrower such as interest rate , repayment period range, charges and interest rate structure, key conditions of compliance, contingencies etc.
- In accordance with the recent RBI guidelines on IRACP norms, exact due dates for repayment of a loan, frequency of repayment, the breakup between principal and interest, Overdue penalty to be charged shall be clearly specified in the language understood by the borrower in the loan agreement and in the sanction letter.
- The company provides microfinance collateral-free loans to households as per the RBI prescribed norms. Here ‘household’ shall mean an individual family unit, i.e.,husband, wife, and their unmarried children.
- The information regarding the household income of the clients is to be duly submitted to the Credit information companies (CICs).
- While considering loan sanctions, the company ensures that a household’s monthly loan repayment outflows do not exceed 50% of its total monthly household income.
- While calculating monthly loan repayment obligations, the Company considers all outstanding loans (collateral-free microfinance loans as well as any other type of collateralized loans) of the household.
- Repayments (including both principal and interest components) on all current loans, as well as the loan under consideration, are included in the outflows capped at 50% of monthly household income.
- Existing loans with outflows of more than 50% of a household’s monthly income due to debt payments are allowed to mature. Additional loans to these households are granted only when the required maximum of 50% has been met.
Creditree Loan Pricing Policy :
The company follows a microfinance loan pricing policy agreed by the board of directors, which includes, among other things, the following:
- Documented interest rate model to arrive at all-inclusive interest rate.
- Breakdown of components like cost of funds, risk premium, margin, etc.
- Range of spread for each component based on borrower category.
- Ceiling on interest rate and all other applicable charges.
- Factsheet with pricing details for all loan types to low-income households.
- Display of interest rate ranges in offices, booklets, and website.
Creditree issues loan card to the borrower which incorporates the following:
- Information that adequately identifies the borrower.
- Simplified factsheet about the Loan particulars.
- All other terms and conditions are clearly defined the Loan Agreement.
- Consent based issuance of Loan with detailed loan particulars.
- Compliance of KYC guidelines of RBI.
- Flexible repayment periodicity as per the borrower’s requirement.
- Loan will be extended only if borrowers have demonstrated an adequate ability to repay and loans will not put borrowers at significant risk of over-indebtedness.
- The company explicitly discloses all the fees charged to the borrower in the factsheet. No additional fees are charged to the microfinance borrowers which are not specifically mentioned in the factsheet.
- Acknowledgements by the branch of all repayments received and the final discharge.
- Recovery is conducted at mutually agreed central location; only after two failures, recovery can be at residence/work.
Recovery of Loan process :
The recovery official shall not adopt any harsh method towards recovery, which is outlined as under without limiting the general application and understanding:
- Use of threatening or abusive language.
- Persistently calling the borrower and/ or calling the borrower before 9:00 a.m. and after 6:00 p.m.
- Harassing relatives, friends, or co-workers of the borrower.
- Publish borrower names.
- Use or threat of use of violence or other similar means to harm the borrower or borrower’s family/ assets/ reputation.
- Misleading the borrower about the extent of the debt or the consequences of non-repayment
Staff Training
The staffs are trained specially to focus on –
- Customer-friendly behaviour.
- Methodologies of necessary enquiries regarding the household income and existing debt of the household.
- Documentation and Disbursement process,
- Recovery without harsh measures and through specified processes,
- Escalation of grievances of borrowers,
- Compliance of all regulatory guidelines as per this policy document.