1. Introduction

Padmalaya Finserve Private Limited (“Padmalaya”) operates with the objective to provide access to finance in an efficient, scalable and reliable manner. Padmalaya provides financial products and services through online and offline channels directly and through third parties. The Company is committed to conduct its business responsibly.

2. Scope

The client protection principles outlined in the appendix hereto will be applied by Padmalaya as appropriate while offering financial products and services to its Customers (as defined below) and other clients including third party financial products and services through offline or online channels directly or through third parties as well as the marketing and sales of such financial products and services. The Fair Practices Code given below will govern the lending operations of Padmalaya.

3. Applicability

This Policy is applicable for all financial products and services offered by Padmalaya, including credit facilities offered directly or through online / offline channels.

4. Fair Practices Code

For the purposes of this Fair Practices Code section, the following expressions shall have the meanings set forth below:

• Annualised Percentage Rate (APR) means the effective all-inclusive annualised total cost of borrowing to the borrower, measured as on the date of sanction of the credit facility.

• Company refers to Padmalaya Finserve Private Limited.

• Consumer Credit refers to the credit facilities given to individuals, which consists of (a) loans for consumer durables, (b) credit card receivables, (c) auto loans (other than loans for commercial use), (d) personal loans secured by gold, gold jewellery, immovable property, fixed deposits (including FCNR(B)), shares and bonds, etc., (other than for business / commercial purposes), (e) personal loans, (f) loans given for other consumptions purposes (e.g., social ceremonies, etc.), and (g) line of credit. However, it excludes (a) mortgage loans, (b) consumption loans given to farmers under KCC and any other credit topics which may be regulatorily recognised as such from time to time.

• Credit Facilities includes loans, lines of credit, working capital and other similar facilities, whether funded and unfunded.

• Customers refers to borrowers and includes applicants for credit facilities and the term Customer shall be construed accordingly.

• Penal Charge refers to the late payment fine levied from the date of default until the date of actual payment. This charge shall not have a compounding impact and governed by the Board Approved policy of ‘Overdue Charges Policy’

• Personal Loans refers to Credit Facilities given to individuals and consist of (a) Consumer Credit, (b) education loan, (c) loans given for creation / enhancement of immovable assets (e.g., housing, etc.), and (d) loans given for investment in financial assets (shares, debentures, etc.).

5. Applications for Credit Facilities and their processing

All communications to the customer shall be in the vernacular language or in a language understood by the customer.

Loan application forms shall include necessary information which affects the interest of the customer, 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 customer.

The loan application form shall indicate the documents required to be submitted with the application form.

A system of giving acknowledgement for receipt of all loan applications shall be devised and preferably, the time frame within which loan applications will be disposed of shall also be indicated in the acknowledgement.

6. Loan terms and conditions

The amount of loan sanctioned along with the terms and conditions including annualised rate of interest and method of application thereof shall be conveyed in writing to the customer in the vernacular language or in a language understood by the customer by means of sanction letter or otherwise, and the record of acceptance of these terms and conditions by the customer shall be kept on record.

The total cost of borrowing in the form of APR, the calculation of which includes not only the interest rate but also other fees the borrower will be charged, shall be disclosed upfront in case of loans to individuals for purposes other than business.

Penalties charged for late repayment shall be mentioned in bold in the loan agreement.

A copy of the loan agreement in the vernacular language or in a language understood by the customer along with a copy each of all enclosures quoted in the loan agreement shall be provided to all the customers at the time of sanction / disbursement of loans.

7. Credit facility pricing model

The pricing of credit facilities, which shall be measured in terms of effective APR, shall be approved by the Credit Committee from time to time which shall be determined on the basis the Board approved ‘Interest Rate Policy’.

The interest rate model of the Company shall be based on factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances and the credit approving authority of the Company is delegated with such powers.

Interest rates charged by the Company depends on a variety of factors affecting the Company including cost of borrowed funds, matching tenor cost, market liquidity, RBI policies on credit flow, offerings by competition, market reputation, cost of operations, disbursements, cost of capital required, inherent credit and default risk in the counterparty and products, industry trends, expected return on equity etc.

Identical products with identical tenor and availed during the same period may attract different interest rates for different customers.

Interest rates could vary depending upon consideration of all or combination of multiple factors including but not limited to the following:

• Credit and default risk in the related business segment.

• Historical performance of similar homogeneous customers.

• Profile of the applicant.

• Industry segment.

• Repayment track record of the applicant.

• Nature and value of collateral security.

• Secured vs unsecured loan.

• Seniority of the loan.

• Loan ticket size.

• Credit rating of the applicant and corporate guarantor, if any.

• Loan tenor.

• Location delinquency and collection performance (applicable for retail).

• Other indebtedness of the applicant.

Interest rates will be intimated to the customers at the time of sanction of the loan and the interest and principal repayment schedule will be made available to the customer.

Interest shall be charged only on the outstanding principal and only for such period such principal amount remains outstanding.

Besides interest, other financial charges like processing fees, late payments, RTGS / other remittance charges, etc. may be levied by the Company as contemplated in the loan documents including KFS.

Changes in interest rates and charges shall be given effect only prospectively and a suitable condition to that shall be incorporated in the loan agreement. Any increase in credit limits shall be with the explicit consent of the customer.

8. Penal charges in credit facilities

The Penal charges in the credit facilities shall be governed by the Credit Committee reporting to the Board approved Overdue charge Policy.

9. GRIEVANCE REDRESSAL AND DATA PROTECTION OFFICER 

Notice in simple terms shall be given to the customer in the vernacular language or a language as understood by the customer of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc.

Loan recall or requiring accelerated payment or performance under the agreement shall be in accordance with the loan agreement.

10. Lien and Setoff

Company shall 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 that it may have against customer.

If such right of set off is to be exercised, the customer shall be given notice about the same with full particulars about the remaining claims and the conditions under which Company is entitled to retain the securities till the relevant claim is settled / paid.

11. Release of movable/immovable property documents on repayment/ settlement of Personal Loans

Company shall release all the original movable / immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment / settlement of the loan account.

The customer shall be given the option of collecting the original movable / immovable property documents either from the branch where the loan account was serviced or any other office of the Company where the documents are available, as per her / his preference.

The timeline and place of return of original movable / immovable property documents shall be mentioned in the loan sanction letters issued on or after the effective date.

In order to address the contingent event of demise of the sole customer or joint customers, a well laid out procedure for return of original movable / immovable property documents to the legal heirs shall be put in place and displayed on the website of the Company along with other similar policies and procedures, if any, for customer information.

Without prejudice to the rights of a customer to get any other compensation as per any applicable law, (i) in case of delay in releasing of original movable / immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment / settlement of loan, Company shall communicate to the customer reasons for such delay and in cases where the delay is attributable to the Company, it shall compensate the customer at the rate of ₹5,000 for each day of delay and (ii) in case of loss / damage to original movable / immovable property documents, either in part or in full, Company shall assist the customer in obtaining duplicate / certified copies of the movable / immovable property documents and shall bear the associated costs, in addition to paying compensation as indicated above.

12. Reset of floating interest rate on equated periodical instalment based floating rate Personal Loans

The Guideline on ‘Reset of floating interest rate on equated periodical instalment based floating rate Personal Loans’ shall be governed by the Board approved Interest Rate Policy.

13. General

Company shall refrain from interference in the personal affairs of the customer except for the purposes of implementing the terms and conditions governing the loan while maintaining the customer’s dignity through fair and ethical interactions.

In the matter of recovery of loans, Company shall not and shall ensure that the recovery agents acting on its behalf directly or indirectly shall not resort to intimidation or harassment of any kind, either verbal or physical, against any person in the course of conducting collection / selling activities, including acts intended to humiliate publicly or intrude the privacy of the debtors' family members, neighbours and friends, sending inappropriate messages either on mobile or through social media,

making threatening and anonymous calls or persistently calling the customer and / or calling the customer before 8:00 a.m. and after 7:00 p.m. for recovery of overdue loans.

Company shall ensure that such agents or staff engaged in recovery of loans are adequately trained to deal with the customers in an appropriate manner.

14. Grievance Redressal Mechanism

The Company shall designate a Grievance Redressal Officer (“GRO”) to maintain a record of customer complaints received by the Company against the Company, or against any person acting directly or indirectly on behalf of the Company.

GRO shall endeavour to resolve such complaints within 15 (fifteen) days of receipt thereof.

In case the complaint requires more time for resolution, the same shall be informed to the customer. The customer shall be updated at regular intervals regarding the status of the complaint by GRO.

The internal grievance redressal mechanism shall ensure that complaints arising out of the action / misconduct by any functionary within the Company shall be referred by GRO for developing solutions and disposal of the complaint.

In case of any complaints / grievances the customer may contact the Customer support Customer Support Centre

Customer Support Centre

Address: Padmalaya Finserve Private Limited, Building 115, Sunday Hub, Amba Talavadi Road, Katargam, Surat, Gujarat – 395004, India

Number: +91 8287212984

Email ID: care@padmalayafinserve.com

In case the customer is not satisfied with the response of the Customer Support Centre, or if no response is received within 10 (ten) days, the customer may escalate the complaint to the Grievance Redressal/Nodal Officer:

Name: Kundan Kumar

Address: Padmalaya Finserve Private Limited, Building 115, Sunday Hub, Amba Talavadi Road, Katargam, Surat, Gujarat – 395004, India

Number: +91 8287212972

Email ID: Kundan@padmalayafinserve.com

GRO may formally delegate the task of redressal of a specific complaint to his / her team as suitable, with due information to the customer.

15. Principal Nodal Officer under the Ombudsman Scheme

In accordance with the Ombudsman Scheme for Integrated Ombudsman Scheme, 2021 (“Scheme”), the Company has designated Mr. Kundan Kumar as the Principal Nodal Officer (“PNO”) for all locations of the Company who shall be responsible for representing the Company before the Ombudsman and the Appellate Authority under the Scheme and furnishing information on behalf of the Company in respect of complaints filed against the Company under the Scheme.

The salient features of the Scheme are annexed hereto.

The contact details of the Principal Nodal Officer are set out below:

Name: Kundan Kumar

Address: Padmalaya Finserve Private Limited, Building 115, Sunday Hub, Amba Talavadi Road, Katargam, Surat, Gujarat – 395004, India

Number: +91 8287212972

Email ID: Kundan@padmalayafinserve.com

16. Complaints to the Ombudsman

In case the customer does not receive a response from the Grievance Redressal Officer or the Nodal Officer within one month from the date of making a representation to the Company, or if the customer is not satisfied with the response so received, a complaint may be made in accordance with the Reserve Bank - Integrated Ombudsman Scheme, 2021 to the Ombudsman in whose jurisdiction the office of the Company complained against is located.

Complainants can lodge their complaints online on RBI’s portal https://cms.rbi.org.in under the Scheme.

Complaints can also be filed by sending an email to CRPC@rbi.org.in or sent in physical mode to the Centralised Receipt and Processing Centre set up at Reserve Bank of India, 4th Floor, Sector 17, Chandigarh – 160017 in the format prescribed in the Scheme.

A copy of Integrated Ombudsman Scheme, 2021 is available with the Principal Nodal Officer. A copy of the Scheme is available on the RBI website and on the CMS portal.

17. Guidelines on Conduct towards Microfinance Customers

As regards microfinance loans, the Company shall conduct its operations in adherence to the requirements set out below in compliance with the Master Direction - Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 and other applicable regulatory norms issued from time to time.

At the time of origination of each microfinance loan, the loan applicant shall be provided with the choice of at least two repayment periodicities out of weekly, fortnightly or monthly repayment periodicity.

The Company shall have a well-documented interest rate model / approach for arriving at the all-inclusive interest rate. The Company shall prominently display the minimum, maximum and average interest rates charged on microfinance loans in all its offices, in the literature issued by it and on its website.

Any change in interest rate or any other charge shall be informed to the customer well in advance and these changes shall be effective only prospectively.

The Company shall disclose pricing related information to a prospective customer in a standardised simplified factsheet / KFS as per prescribed format.

Any fees to be charged to the microfinance customer by the Company and / or its partner / agent shall be explicitly disclosed in the factsheet / KFS. The customer shall not be charged any amount which is not explicitly mentioned in the factsheet / KFS.

The Company shall not charge any pre-payment penalty on microfinance loans. Penalty, if any, for delayed payment shall be applied on the overdue amount and not on the entire loan amount.

There shall be a standard form of loan agreement for microfinance loans in a language understood by the customer.

The Company shall provide a loan card to the customer which shall incorporate the following requirements. All entries in the loan card shall be in a language understood by the customer:

• Information which adequately identifies the customer.

• Simplified factsheet on pricing.

• All other terms and conditions attached to the loan.

• Acknowledgements by the Company of all repayments including instalments received and the final discharge.

• Details of the grievance redressal system, including the name and contact number of the nodal officer of the Company.

• A statement that purchases of any non-credit product by the microfinance borrowers is not mandatory and shall be purely on a voluntary basis.

Issuance of non-credit products, if any, shall purely be on a voluntary basis and shall be with full consent of the customers and fee structure for such products shall be explicitly communicated to the customer in the loan card itself.

Trainings, if any, offered by the Company to its customers shall be free of cost.

All field staff shall be trained to offer such training and also make the customers fully aware of the procedure and systems related to loan / other products. The Company’s field staff shall be trained to make necessary enquiries with regard to existing debt of the customers.

The Company shall be accountable for preventing inappropriate staff behaviour (employees or employees of the outsourced agency) and timely redressal of the grievances of the customer.

The above declaration shall also be made in the loan agreement given to the customer and also in the Code displayed in its office / branch premises and on Company’s website.

Recovery shall be made at a designated / central designated place decided mutually by the customer and the Company. However, field staff shall be allowed to make recovery at the place of residence or work of the customer if the customer fails to appear at the designated / central designated place on two or more successive occasions.

Company or its agent shall not engage in any harsh methods towards recovery. Without limiting the general application of the foregoing, following practices shall be deemed as harsh:

• Use of threatening or abusive language.

• Harassing relatives, friends, or co-workers of the customer.

• Publishing the name of customers.

• Use or threat of use of violence or other similar means to harm the customer or customer’s family / assets / reputation.

• Misleading the customer about the extent of the debt or the consequences of non-repayment.

Any engagement of recovery agency, which shall, inter alia, cover individuals involved in the recovery process shall be in accordance with the due diligence process stipulated in the policy approved by the board of directors of the Company.

Company shall ensure that the recovery agents engaged by it carry out verification of the antecedents of their employees engaged in recovery on an annual basis.

Company shall also ensure that its recovery agents are subjected to police verification at the time of beginning their engagement.

To ensure due notice and appropriate authorisation, Company shall provide the details of recovery agency to the customer while initiating the process of recovery.

Company shall direct the recovery agency to ensure that its employees engaged in recovery also carry a copy of the notice and the authorisation letter from the Company along with the identity card issued to him by the Company or the agency.

Where the recovery agency is changed by the Company during the recovery process, the Company shall notify the customer of the change and apply the foregoing requirements on the new agency.

The up-to-date details of the recovery agencies engaged by the Company in relation to microfinance loans shall be published on the Company’s website.

18. Loans Sourced through Digital Lending Platforms

Where the Company sources or originates loans through digital lending platform(s), the following additional steps shall be taken by the Company:

• The names of all digital lending platforms engaged as LSPs shall be disclosed on the Company’s website.

• All digital lending platforms shall be directed to disclose upfront to the customer, the name of the Company on whose behalf they are interacting with the customer.

• Immediately after sanction but before execution of the loan agreement, the sanction letter shall be issued to the customer on the Company’s letterhead.

• A copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement shall be furnished to all customers at the time of sanction / disbursement of loans.

• Effective oversight and monitoring shall be ensured over the digital lending platforms engaged by the Company.

• Adequate efforts shall be made towards creation of awareness about the Company’s grievance redressal mechanism.

19. Loan facilities to the physically/visually challenged

Company shall not discriminate in extending products and facilities including loan facilities to physically / visually challenged applicants on grounds of disability.

All branches of the Company shall render all possible assistance to such persons for availing of the various business facilities.

Company shall ensure that its employees are suitably trained regarding the rights of persons with disabilities guaranteed to them by the law and international conventions.

20. Periodical review

Compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism shall be periodically reviewed by the senior management of the Company and a consolidated report of such reviews shall be submitted to the Board of Directors of the Company on a quarterly basis.

21. Review of Code

The Fair Practices Code shall be reviewed every year by the Board of Directors of the Company or whenever there is a significant change in law governing the subject matter thereof.