Master Circular – Fair Practices Code
The Reserve Bank of India (RBI) has issued a master circular on fair practices code for Non-Banking Financial Companies (NBFCs).
The circular outlines guidelines for NBFCs on fair practices, including:
Applications and Loan Processing
– Loan appraisal and terms/conditions
– Disbursement of loans, including changes in terms and conditions
– General guidelines
– Responsibility of Board of Directors
– Grievance Redressal Officer
– Language and mode of communicating Fair Practice Code
– Regulation of excessive interest charged by NBFCs
– Complaints about excessive interest charged by NBFCs
– Clarification regarding repossession of vehicles financed by NBFCs
Specific Guidelines for NBFC-MFIs
The circular also provides specific guidelines for NBFC-Micro Finance Institutions (NBFC-MFIs), including:
General Guidelines
– Disclosures in loan agreement/loan card
– Non-Coercive Methods of Recovery
– Internal control system
Lending against Collateral of Gold Jewellery
NBFCs are required to put in place a Board-approved policy for lending against collateral of gold jewellery.
Chat with the Master Circular:
Download: Master Circular – Fair Practices Code