Fair Practice Code

Introduction

The FPC is made to ensure fairness and transparency in dealings with the customers of ARTH and applies to all products and services offered by it.

Purpose & Objective

This Fair Practice Code (“FPC” or the “Code”) is framed in accordance with the guidelines outlined in the Master Direction DNBR.PD.007/03.10.119/2016-17 and Circular DOR(NBFC)(PD)CC. No.112/03.10.001/ 2019-20 issued by the Reserve Bank of India. This FPC is made with the intent to ensure fairness and transparency in dealings with the borrowers/customers of Arthimpact Digital Loans Private Limited (“ARTH” or the “Company”) and applies to all products and services offered by it. All employees, management, and the Board of ARTH are bound by this FPC. The Code, as revised from time to time, will be available on the website for information of various stakeholders.

Key Commitment

An extensive process has been devised for the Verification & Profiling of the beneficiaries and Disbursement of the grants.

ARTH will act under the FPC to ensure the fulfilment of all its following social/business goals:

• livelihood support
• micro-enterprise finance
• hyper-local economy development

The company will make sure all its dealings are based on principles of integrity and transparency

The company will make sure all the products and services are in line with relevant laws and regulations

Company ensures to promote good practices and ensure good practices in dealing with borrowers of the Company (“Customers”)

Company ensures to promote a fair relationship between the Customer and the Company

To ensure compliance with legal norms in matters relating to recovery of advances

To strengthen mechanisms for redressal of customer grievances

Guidelines

This FPC applies to the following areas:

• Applications for loans & their processing
• Loan Appraisal and terms/conditions
• Disbursement of loans including changes in terms and conditions
• Rate of Interest charged
• Customer Grievance Redressal
• Technology
• Client Protection

1. Application for Loans and Processing

• As a part of lending activity, loans will be provided to customers for their business requirements ranging from small to medium-sized enterprises
• All communications to the borrower shall be in the vernacular language or a language as understood by the borrower
• Communications to the customers prior to the disbursement of the loan about the fees/charges if any, payable for processing, prepayment options, and any other matter which affects the interest of the borrower
• Company shall communicate the customers about the rejection of the application of the loan
• Loan products advanced through DLAs and/or LSPs are subject to further disclosures / requirements as mentioned below:
  • Key Fact Statement (KFS) in the format provided in the Digital Lending Guidelines dated September 2, 2022 issued by the RBI in respect of the digital loan product shall be provided to the Customer prior to sanctioning and disbursing the loan
  • An all-inclusive cost expressed in ‘Annualized Percentage Rate’ (“APR”) shall be provided to the Customer. APR is the effective annualized rate charged to the borrower of a digital loan. APR shall be based on an all-inclusive cost and margin including cost of funds, credit cost and operating cost, processing fee, verification charges, maintenance charges, etc., and exclude contingent charges like penal charges, late payment charges, etc.
  • The Company shall disclose the names of the LSPs, DLA on its website, digital loan product information, details of LSPs acting as collection agents, etc.
  • No information (including personal information or data of the borrowers) shall be collected by LSPs / DLAs without the prior explicit consent of the borrowers
  • The Company shall ensure that the LSPs / DLAs put in a place a comprehensive policy compliant with applicable laws and associates’ regulations in relation to collection of data (including personal data and information) in respect of the borrowers
  • All data collection by the Company is stored in the servers located in India

2. Loan Appraisal and Terms & Conditions

• ARTH would convey to the borrower the amount of loan sanctioned along with the terms and conditions including annualized rate of interest, and the borrower’s acceptance of these terms and conditions will be obtained and kept in records
• A copy of the loan agreement along with a copy of each of all enclosures quoted in the loan agreement will be furnished to the borrower at the time of disbursement of the loan
• ARTH would conduct a credit assessment of all the loan application(s) in line with the credit policy and relevant regulatory guidelines issued by RBI or any other statutory authority
• In relation to the digital loan products, the Company shall ensure the following:
  • The Company shall capture the economic profile of the Customers (age, occupation, income, etc.), before extending any loan over their own DLAs and/or through LSPs engaged by them, with a view to assessing the Customer’s creditworthiness in an auditable way
  • The Company shall ensure that there is no automatic increase in credit limit unless explicit consent of Customer is taken on record for each such increase

3. Disbursement of Loans Including Changes in Terms & Conditions

• ARTH would ensure the timely disbursement of loans in accordance with the terms and conditions governing such sanctions
• The company shall give notice to the borrower in the vernacular language or a language as understood by the borrower of any change in the terms and conditions including interest rates, service charges, etc.
• ARTH also ensures that changes in interest rates and charges shall be effected only prospectively
• Any decision to recall/accelerate payment shall align with the loan agreement

4. Rate of Interest Charged

• The rate of Interest, processing fee, and any other charges would be determined based on relevant factors such as cost of funds, margin, risk premium, etc.
• The rate of interest and the approach for gradation of risk and rationale for charging different rates of interest for different categories of borrowers, wherever applicable, shall be disclosed prior to the disbursement of the loan
• The APR shall be presented to the customer which shall include the Rate of Interest levied on the sanction loan, to make the borrower aware of the exact rates that would be charged to their account

5. Customer Grievance Redressal

• • ARTH has a well-laid-out Grievance Redressal Mechanism to resolve disputes raised by customers
  • Details of the Grievance Officer of the Company, for the benefit of the customers, would be displayed on the website and Loan Agreement, to facilitate the borrower with effective Grievance Redressal
  • In case the complaint/ dispute is not redressed within one month, the customer may appeal to:

• The Company shall ensure that the DLAs / LSPs appoint a suitable Nodal Grievance Redressal Officer to deal with fintech/ digital lending related complaints/ issues raised by the borrowers. The name and details of such officer along with the process of Grievance Redressal shall be set out on the website of the LSPs / DLAs.

6. Technology

• In line with the mandate of RBI, the Company has adopted and implemented the following requirements:
  • The Company shall ensure that LSPs/DLAs engaged by them do not store personal information of the Customers except some basic minimal data (viz., name, address, contact details of the customer, etc.) that may be required to carry out their operations
  • The Company shall carry out the responsibility of ensuring that the LSPs and DLAs maintain data privacy and security of the Borrower’s personal information
  • The Company shall ensure that the Customer shall be provided with an option to give or deny consent for use of specific data, restrict disclosure to third parties, data retention, revoke consent already granted to collect personal data and if required, make the app delete/ forget the data
  • The Company shall ensure that any collection of data by their DLAs and DLAs of their LSPs is need-based and with prior and explicit consent of the Customers having audit trail. The Company shall also ensure that DLAs desist from accessing mobile phone resources like file and media, contact list, call logs, telephony functions, etc.
  • The purpose of obtaining borrowers’ consent needs to be disclosed at each stage of interface with the borrowers
  • Explicit consent of the borrower shall be taken before sharing personal information with any third party, except for cases where such sharing is required as per statutory or regulatory requirement.
  • The Company shall ensure that clear policy guidelines regarding the storage of customer data including the type of data that can be stored, the length of time for which data can be stored, restrictions on the use of data, data destruction protocol, standards for handling security breach, etc., are put in place and also disclosed by DLAs of the REs and of the LSP engaged by the Company prominently on their website and the apps at all times
  • The Company shall ensure that no biometric data is stored/ collected in the systems associated with the DLA of the Company / their LSPs, unless allowed under extant statutory guidelines
  • The Company shall ensure that they and the LSPs engaged by them comply with various technology standards/ requirements on cybersecurity stipulated by RBI and other agencies, or as may be specified from time to time, for undertaking digital lending
  • All data (including personal data and information of the Customers) shall be stored in India.

7. Client Protection

• In the matter of recovery of loans, the company will not resort to undue harassment
• The company will ensure that its staff is adequately trained to deal with customers appropriately and respectfully
• The company will treat the personal information of customers/borrowers as private and confidential even when they are no longer a customer. It will not reveal the personal information or details of the customers’ account to any third party, other than in the following four exceptional cases when required by law, or to protect against any kind of fraud, or with the customer’s permission or with third party on a need to know basis
• In cases where the sourcing of clients is done by any external entity, complete care, and diligence shall be followed in ensuring that the entity follows appropriate client protection standards in consonance with this FPC

Review

This FPC and the functioning of the Grievance Redressal Mechanism shall be reviewed by the Board periodically and be modified to concerning changes in the company operating model, product and service offerings, external environmental factors, and modifications in the stated master direction & circular or any new introduction thereof. A consolidated report of the review of the FPC shall be submitted to the Board at regular intervals.

Implementation

The FPC shall be effective from the date of adoption by the Board

Amendment

The FPC shall be amended and/or restated and updated from time to time and such amendments and/or restatements and updates shall be effective from the date of adoption by the Board.