Fair Practice Code

Preamble and Scope / Regulatory Basis

This Policy is anchored to the RBI Fair Practices Code for NBFCs and shall reference RBI Circular DNBS(PD).CC.No.320/03.10.01/2012-13, the Master Directions as updated from time to time, and subsequent amendments and guidelines, including digital lending directions.

The Policy shall be reviewed within 30 days of any RBI amendment that impacts FPC requirements and, at a minimum, annually.

The Reserve Bank of India (RBI) has issued guidelines on Fair Practices Code for Non-Banking Financial Companies (NBFCs) thereby setting standards for fair business and corporate practices while dealing with their customers. Mount Shikhar Financial Services Limited (“the Company”) hereby furnishes the Fair Practices Code (“the FPC”) based on the guidelines issued by the RBI. The Company shall also make appropriate modifications in the FPC from time to time to confirm to the standards that may be prescribed by RBI from time to time. Considering the nature of business of the Company, it is proposed to establish the following as the Fair Practices Code for the Company’s lending activities.

Based on the current business of the Company, the Fair Practices Code shall apply to the following categories of products and services offered by the Company:

• Business Loan
• Personal Loan
• Digital lending journeys (web/app)
• Arrangements involving Lending Service Providers (LSPs)
• Digital Marketing Associates (DMAs)
• Other third parties engaged for sourcing, underwriting support, disbursal facilitation, servicing, or recovery.

Commitments made in the FPC are applicable under normal operating environment.

KEY OBJECTIVES

The key objectives of putting in place the FPC are as follows:

• To act fairly and reasonably in all the dealings with borrowers by ensuring that:
  • The Company’s products, services, procedures and practices will meet the broad requirements and standards in the FPC;
  • The Company’s products and services will be in accordance with relevant laws and regulations as applicable for the time being in force;
  • The Company’s dealings with its borrowers will rest on ethical principles of honesty, integrity and transparency.
• The Company will assist its customers in understanding as to what are the broad features of its financial products and services and what are the benefits and risks involved in availing the same by:
  • Providing information about the products and services in simple manner;
  • Explaining the financial implications of using the products and services.
• The Company will make every attempt to ensure that its customers would have trouble-free experience in dealing with it. However, in case of error of commission and/or omissions, it shall:
  • Deal with the errors promptly and effectively;
  • Deal with the Grievances redressal in a quick and efficient manner and to the satisfaction of the customers;
  • Promptly handle Complaints;
  • Have Escalation process, in the event of dissatisfaction of the borrower in handling his complaint(s);

APPLICABILITY OF FAIR PRACTICE CODE

The FPC will be applicable to the following broad areas:

• Loan applications and processing thereof
• Loan appraisal and terms/conditions
• Disbursement of loans including changes, if any, in terms and condition.
• Post disbursement supervision/monitoring
• Other general provisions

i. Loan application cum agreement form and processing thereof

• The Company shall acknowledge every loan application within 2 working days via SMS/email/in-app notification and provide a unique reference number for tracking.
• Loan application will, inter alia, include the broad features and the terms and conditions governing the loan. This would enable the borrowers to take an informed decision by comparing and analyzing the terms offered by the Company with other lenders in the market. The said Form shall also specify the documents required to be submitted by the borrowers.

ii. Loan appraisal and terms/conditions

• The Company shall consider all the loan applications keeping in mind the risk based assessment procedures adopted by it.
• The Company, before sanctioning the loan, would assess the ability of the borrowers to repay the loan.
• Loan application cum agreement form shall be made available to the borrower at the time of loan application. The borrowers shall give their acknowledgement in writing in token of their acceptance of terms and conditions governing the loan. The Loan application cum agreement form shall contain the broad terms and conditions governing the loan including the annualized rate of interest and method of application thereof.
• A copy of the loan documents including loan agreement and annexure thereof shall be made available to the borrower.
• The sanction terms shall include clear disclosure of:
  • Annual Percentage Rate (APR), computed to include interest and all fees/charges, expressed on an annualised basis.
  • A Key Fact Statement (KFS) summarising the total cost of credit (including all fees/charges, insurance if bundled, taxes), repayment schedule, prepayment/foreclosure charges, cooling-off/look-up period, and borrower rights. The KFS shall be provided before execution of the loan agreement and shall be part of the loan documents.
• The Company shall provide a minimum 3 working day cooling-off period (or longer where prescribed) during which retail and MSME borrowers may exit the loan without any penal charge, subject to repayment of principal disbursed and proportionate interest and any non-refundable statutory charges, if applicable. The cooling-off right and the process to exercise it shall be stated in the KFS and loan agreement.

iii. Disbursement of loans including changes in terms and conditions

• Disbursement of amount of loans sanctioned may be made available to the borrowers on demand subject to completion of all formalities including execution of loan documents.
• Change in the interest rates and service charges shall be made applicable prospectively. The loan agreement shall contain a specific clause in this regard.
• Upon disbursement, the Company shall communicate to the borrower the amount disbursed, net amount credited (after deductions, if any), and the final repayment schedule via SMS/email/in-app notification.

iv. Post Disbursement Supervision

• The decision, if any, of the Company to recall/accelerate payment or performance of loan shall be in accordance with the terms and conditions of the Loan Agreement.
• The Company shall give reasonable time to the borrowers before recall the loan or asking for accelerating the payment or performance subject to the terms and conditions contained in the Loan Agreement and other related documents.
• In case of recall/acceleration (Other than digital lending loans), the Company shall provide a minimum 30-day written notice stating specific reasons, amounts due, and borrower rights and escalation channels. For secured loans, such actions shall align with Section 13(2) of the SARFAESI Act, where applicable.

Other General Provisions

• The Company shall refrain from interfering in the affairs of the borrowers except as provided in the terms and conditions governing the loan as contained in the loan documents (unless new information, not earlier disclosed by the borrower, has come to its notice).
• The Company shall generally convey its consent within a reasonable period of time to all requests from the borrower to transfer the loan account of a particular borrower to other NBFC, bank or financial institution. Such transfer shall be in accordance with the contractual terms entered into with the borrower and in accordance with the statutes, rules, regulations and guidelines as may be applicable from time to time.
• The Company shall not discriminate on the grounds of gender, caste or religion in its lending policy and activities.
• In the case of recovery of loans, the Company shall resort to the usual measures, which are legally and legitimately available to it and as per laid down guidelines and extent provisions and shall operate within the legal framework.
• Recovery shall adhere to a formal Code of Conduct prohibiting harassment or intimidation. Recovery personnel (including third-party agents/LSPs/DMAs) shall:
• Contact borrowers only between 8:00 a.m. and 7:00 p.m., unless otherwise permitted by law or expressly requested by the borrower.
• Identify themselves, the Company, and the purpose of the contact at the outset of each interaction.
• Use only the contact modes consented to by the borrower and respect borrower privacy.
• Be trained, empanelled, and periodically certified; calls/visits may be recorded/ logged for audit and grievance purposes.

• The Company shall provide the terms and conditions in respect of its lending activities or services whenever the borrower requests for the same.
• On request from borrower for closure of his loan account, the request will be executed within 21 days from receipt thereof request subject to clearance of pending dues and completion of all the formalities as prescribed by the Company. In case the request cannot be executed in the time frame stated above due to any reason, the same may be communicated to the borrower.
• Penal charges framework - The Company shall not levy penal interest. Any penalty for non-compliance with material terms shall be in the form of reasonable penal charges, flat/fee-based, transparently disclosed upfront in the KFS/loan agreement, and not capitalised into the rate of interest. Penal charges, where applicable, shall be applied only to the specific defaulted amount/obligation in accordance with RBI directions.

CONFIDENTIALITY

• All handling, sharing, retention, and processing of personal data shall be governed by the Company’s Privacy Policy, which complies with the Digital Personal Data Protection Act, 2023 and applicable RBI guidelines. The FPC shall be read harmoniously with the Privacy Policy; in case of conflict, the stricter standard for borrower protection shall prevail.
• Unless authorized by the borrower, the Company will treat all his personal information as private and confidential.
• Data-sharing with LSPs/DMAs and other third parties shall be on a need-to-know basis under appropriate contractual, security, and consent frameworks; explicit borrower consent shall be captured for any data access beyond regulatory or contractual necessity.
• The Company may not reveal transaction details of the borrowers to any other persons except under following circumstances:
• If the Company is required to provide the information to any statutory or regulatory body or bodies;
• If arising out of a duty to the public to reveal the information;
• If it is in the interest of the borrowers to provide such information (e.g. fraud prevention);
• If the borrower has authorized the Company to provide such information to its group/ associate /entities or companies or any such person/ entity as specifically agreed upon;

COMPLAINTS

• Complaints shall be acknowledged within 7 working days and resolved within:
• 15 working days at Level 1 (Partner app/portal support),
• 30 working days at Level 2 (Company grievance cell).
• If unresolved within 30 days of first registration, the borrower may escalate under RBI’s Integrated Ombudsman Scheme (RB-IOS 2021). Details:
• RBI Ombudsman portal RBI’s online Complaint Management System (CMS)
• Contact centre: 14448 (RBI’s toll-free helpline you can call for guidance or to lodge a complaint)

In case of any complaint/grievances of the borrowers, the same shall be intimated by them in writing to the Grievance Redressal Officer. The Grievance Redressal Officer shall immediately make all efforts to redress the grievances. The concerned employees shall guide the borrowers who wish to lodge a complaint.

GRIEVANCE REDRESSAL MECHANISM

The Company has provided for three tier Grievance Redressal Mechanism to resolve any of its customers query / grievance.

FORCE MAJEURE

The various commitments outlined and made by the Company shall be applicable under the normal operating environment. In the event of any Force Majeure circumstances, the Company may not be able to fulfill the objectives under the FPC to the entire satisfaction of the borrowers, the stakeholders and the public in general.