Fair practices code

Introduction

Zerodha Capital Private Limited, (“The Company”) issues this Fair Practice Code in conformity with Chapter V of Master Direction DNBR.PD.007/03.10.119/2016-17 - Non-Banking Financial Company – Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016, wherein the Reserve Bank of India (RBI) has revised the guidelines on Fair Practices Code for NBFCs to implement the same. Zerodha Capital continuously strives to maintain fairness and transparency in rendering the loans to borrowers and has adopted and put in place the following Fair Practice Code

This Fair Practices Code shall apply throughout Zerodha Capital and other persons who are authorized on behalf of the Company to represent it in the course of its business and will apply across all products and services offered, whether they have been provided offline or online or by any other method, through Zerodha Capital.

Zerodha Capital will deal quickly and sympathetically in attending to customer complaints in light of the objectives of this Fair Practices Code. Zerodha Capital shall treat all personal information of customers as private and confidential and shall not divulge any information to an unrelated third party, unless required by any law or Government authorities, including Regulators or Credit agencies or where the sharing of information is permitted by the customer. Zerodha Capital would provide, on request, a copy of this Fair Practice Code to the borrowers. Zerodha Capital shall not discriminate its customers on the basis of race, caste, gender, marital status, religion or disability.

Applications for loans and their processing

• The Company shall ensure that all communications to the borrower shall be in the vernacular language or a language as understood by the borrower.
• The Loan application forms of the Company will include necessary information which affects the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by other NBFCs can be made and informed decision can be taken by the borrower. The loan application form will indicate the documents required to be submitted with the application form.
• The Company will have a system of giving acknowledgement for receipt of all loan applications. The time frame within which loan applications will be disposed of will be indicated in the acknowledgement.

If Company cannot provide the loan to the customer, it shall communicate the same to the customer through its appointed representatives or directly to the customer verbally. In case customer requires the same in writing the reason(s) for rejection may be provided in writing.

Loan appraisal and terms/conditions

• The Company will convey in writing to the borrower in English, as confirmed to be understood by the borrower, by means of sanction letter or otherwise, the amount of loan sanctioned along with the terms and conditions including annualized rate of interest and method of application thereof and keep the acceptance of these terms and conditions by the borrower on its record. The Company will mention the penal interest charged for late repayment in bold in the loan agreement.
• The Company will furnish a copy of the loan agreement preferably in English, as confirmed to be understood by the borrower, along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.

Disbursement of loans including changes in terms and conditions

• The Company will give notice to the borrower in in English, as confirmed to be understood by the borrower, of any change in the terms and conditions including disbursement schedule, interest rates, service charges etc. The Company should also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard will be incorporated in the loan agreement.
• Any Decision by the Company to recall / accelerate payment or performance under the agreement will be in consonance with the loan agreement.
• The Company will release all securities on repayment of all dues or on realisation of the outstanding amount of loan subject to any legitimate right or lien for any other claim the Company may have against the borrower, in case of secured loans. If such right of set off is to be exercised, the borrower will be given notice about the same with full particulars about the remaining claims and the conditions under which the Company is entitled to retain the securities till the relevant claim is settled/paid.

General

• The Company will refrain from interference in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless new information, not earlier disclosed by the borrower, has come to the notice of the Company).
• In case of receipt of request from the borrower for transfer of the account, the consent or otherwise i.e. objection of the Company, if any, will be conveyed within 21 days from the date of receipt of request. Such transfer shall be as per transparent contractual terms in consonance with law.
• In the matter of recovery of loans, the Company will not resort to undue harassment viz. persistently bothering of the borrowers at odd hours, use of muscle power for recovery of loans, etc. To avoid rude behavior from the staff of the Company, the Company shall ensure that the staff are adequately trained to deal with the customers in an appropriate manner.
• The company reserves the right to amend /alter /modify the codes as mentioned herein above and provide updates from time to time, not affecting/sacrificing the underlining spirit of the code. Such alternation/amendments may be displayed on the website of the Company from time to time for the benefit and information of the customer.
• The Company shall ensure that any public promotional material is clear and not misleading. This Fair Practice Code shall also apply to sales associates / representatives of the company to the extent of their identification when they approach the customer for selling products personally.

Responsibility of Board of Directors

• The Board of Directors of the Company have laid down an appropriate grievance redressal mechanism within the organization. Such a mechanism ensures that all disputes arising out of the decisions of lending institutions' functionaries are heard and disposed of at least at the next higher level.
• The Board of Directors has laid down a mechanism 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 shall be submitted to the Board at regular intervals, as may be prescribed by it.

Grievance redressal

The customer can approach any of our service touch points given below to register a complaint and expect a response within defined time period from complaint registration.

Grievance Redressal Officer

If the complaint/dispute is not redressed within a period of one month the customer may appeal to the Officer-in-Charge of the Regional Office of Department of Non-Banking Supervision of the Bank:

It shall be the endeavor of the company to improve the quality of service and redress complaints and grievances, if any, of the customers as part of Customer Relationship.

Customers who have grievances in respect of decision of the company functionaries can also address their grievances at [email protected]

Regulation of rate of interest

• The Board of Directors of the Company has adopted an interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and has accordingly determined the rate of interest to be charged for loans and advances. The rate of interest and the approach for gradations 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 rates of interest and the approach for gradation of risks is made available on the web-site of the company. The information published in the website or otherwise published shall be updated whenever there is a change in the rates of interest.
• The rate of interest is the annualised rate so that the borrower is aware of the exact rates that would be charged to the account.

Complaints about excessive interest charged by Applicable NBFCs

The Company has laid out appropriate internal principles and procedures in determining interest rates and processing and other charges. In this regard the guidelines indicated in the Fair Practices Code about transparency in respect of terms and conditions of the loans are kept in view.

Repossession of loans and other assets financed

• The Company will include a built in re-possession clause in the loan agreement with the borrower which will be legally enforceable.
• To ensure transparency, the terms and conditions of the loan agreement, shall also contain provisions regarding:
• Notice period before taking possession, unless there comes a situation where the LTV ratio breaches RBI Guidelines and immediate action is required to be taken;
• Circumstances under which the notice period can be waived;
• The procedure for taking possession of the security;
• A provision regarding final chance to be given to the borrower for repayment of loan before the sale / auction of the shares/stocks;
• The procedure for giving repossession to the borrower.

A copy of such terms and conditions will be made available to the borrowers.

Confidentiality

The Company will treat all personal information of the borrowers as private and confidential (even when the borrower is no longer a customer). The Company will not reveal transaction details of the accounts to a third party, including to group entities, except under following circumstances:

• The Company is required by, law or by the order of a court or any statutory authority or as a part of investigation by a public authority, to provide such information,
• If it is in the interest of the borrower to provide such information (e.g. fraud prevention)
• The Borrower requests us to provide information, or
• The Borrower gives us permission to provide such information to our group / associate / entities or companies where the Company have tie-up arrangements for providing other financial service products.

Credit rating agencies

Zerodha Capital would give information about customers to Credit Rating Agencies as prescribed by RBI on:

• Opening of an account.
• The status of monthly repayments made or not made.
• Whether legal proceedings have been initiated against the customer to recover the dues.