The Fair Practice Code (FPC) has been formulated by MUTHOOT MONEY LIMITED. (the Company) in response to guidelines issued by Reserve Bank of India vide circular DNBS. CC.PD. No.266 / 03.10.01 / 2011-12 dated 26 March 2012 titled “Guidelines on Fair Practices Code for NBFCs”.
The FPC will be applicable to all the offices of the Company including the Corporate Office, Hyderabad, Telangana, the Branch Offices located in various centres and the Branches located across India. The FPC shall be binding on all the employees and officers of the Company
The objectives of the FPC are as under.
The Code of Conduct for Directors & Senior Management of Muthoot Money Limited (“theCode”) helps to the standards of business conduct of Muthoot Money Limited (“the Company”) and ensures compliance with various legal requirements which governs the operations of the Company. The purpose of code is to promote ethical conduct and to deter wrongdoing so as to protect the best interest of the company and its stakeholders. The matters covered in the Code are of utmost importance to the Company, our shareholders and our business associates and partners. Further, these are essential so that we can conduct our business in accordance with stated values.
The members of the Board of Directors of the Company and other Senior Management Officials acknowledge and accept the scope and extent of their duties as Directors and Senior Management Officials of the Company (“the Officers”). They have a responsibility to carry out their duties in an honest and businesslike manner and within the scope of their authority, as set forth in the laws of India as well as in the Memorandum and Articles of Association of the Company. They are entrusted with and are responsible for the oversight of the assets and business affairs of the Company in an honest, fair, diligent and ethical manner. As the Officers of the Company, they must act within the bounds of the authority conferred upon them and with the duty to make and enact informed decisions and policies in the best interests of the Company. The Board of Directors has adopted the following Code of Conduct and the Directors and senior managers are expected to adhere to the standards of care, loyalty, good faith and the avoidance of conflicts of interest that follow.
Board Members and Senior Managers will:
The Company fixes the interest rates on gold loans based on the Interest Rate Policy adopted by the Board of Directors in their meeting held on 21st April 2009.
As per this policy, rate of interest on gold loan schemes are fixed taking into account various factors such as cost of funds, overhead costs, fair return on capital employed, market conditions and guidelines of Reserve Bank of India regarding Fair Practices Code.
The Board of Directors of the Company or a Committee drawing power from the Board, while fixing interest rates on Gold Loan Schemes shall be guided by this policy document on Interest Rate Fixation.
In addition to cost factors set out hereunder, the Board or the Committee shall be guided by the market conditions and various rules and regulations, if any, prescribed by the Reserve Bank of India or such other competent authority from time to time.
Interest charged under various Gold Loan Schemes shall have the following components:
Basic Interest Rate represents the rate chargeable under every Gold Loan Scheme irrespective of the risk weight attached to the schemes or the type of scheme. Basic Interest shall be arrived at after considering the following aspects:
This component represents the interest and other incidental charges payable by the Company for servicing the borrowed funds deployed by the Company. Major contributing factor to this component includes interest on bank borrowings, other incidental charges thereto and interest payable on Secured Non- Convertible Debentures.
Overhead costs comprises of employee cost, establishment costs such as charges for rent, electricity, water etc., security charges such as engagement of security guards, setting up of burglar alarms and CCTV cameras, insurance premium for insuring the gold held in the custody of the Company etc., marketing expenses etc.
Fair return on capital is calculated as per industry standards and taking into account the interest of investors of the Company which is a listed one. Market conditions include the rate of interest charged for similar loans by Banks and other NBFCs. Guidelines of Reserve Bank of India from time to time also are strictly followed. The Board shall take into consideration a fair return on capital employed which is to be generated by the management for servicing the owners capital employed in the business.
Thus the basic interest rate for the gold loan schemes shall be determined by considering the cost of working capital, overhead cost and fair return on capital employed.
Risk Interest shall be determined by taking into account the degree of risk involved in loans under each loan scheme. While the rate shall be the lowest for the schemes where advance amount vis-à-vis the weight of gold is the lowest, it shall be increased for schemes offering higher advance amount for the same weight. Further, irrespective of the scheme, the risk interest shall also be determined after taking into account the period of the loan as the incidence of risk goes up with the passage of time. Risks in respect of gold loans includes the fall in price of gold, possibility of the gold pledged turning out to be spurious or of low purity, stolen gold being pledged, delays in settling loans of deceased due to legal issues etc.
The interest rate goes up depending upon the periodicity of servicing the interest. Interest servicing within 30 days of disbursal is priced lowest compared to 90 days and so on.
Penal interest is charged as penalty for non-repayment of the loan dues within the contracted period of 12 months and also to compensate the possibility of loss on account of liability exceeding the realizable value of gold given as security.
The full details of method of calculation of risk interest and penal interest shall be mentioned in the Fair Practices Code approved by the Board of Directors and be published in Company’s Web Site.
The rate of interest of each scheme for each slab period (3 months, 6 months, 12 months) etc. are clearly mentioned in the pledge form as well as the sanction letter issued to the borrower.
As an employee friendly organization, Muthoot Money Pvt Ltd believes in the conduct of the affairs of its constituents in a fair and transparent manner, by adopting the highest standards of professionalism, honesty, integrity and ethical behavior. We are committed to conducting business with integrity and in accordance with all applicable laws and regulations.In its endeavor to provide its employee a secure and a fearless working environment, MMPL has established the "Whistle Blower Policy” (‘‘the policy’’)
A whistle-blowing or reporting mechanism as such set out in the Policy, invites all employees to act responsibly to uphold the reputation of the Company and its subsidiaries. The Policy aims to ensure that serious concerns are properly raised and addressed and are recognized as an enabling factor in administering good governance practices.
The definitions of some of the key terms used in this Policy are given below. Capitalized terms not defined herein shall have the meaning assigned to them under the Code.
The policy should be applicable to;
Board of Audit Committee
Muthoot Money Pvt.Ltd,
Muthoot Chambers, Kurians Tower
Banerji Road, Ernakulam,
Kerala – 682 018
|The Chief Operating Officer Muthoot Money Pvt Ltd, #3-6-2/1/3, 3rd Floor, Grandpa’s Royal Mansion, Liberty X Road, Himayath Nagar, Hyderabad, Telangana - 500 029|
Internal Audit Department
Muthoot Money Pvt Ltd,
#3-6-2/1/3, 3rd Floor,
Grandpa’s Royal Mansion, Liberty X Road, Himayath Nagar,
Hyderabad, Telangana-500 029
|Employees may also write to [email protected]|
If an investigation leads the WBC Committee to conclude that an improper or unethical act has been committed, the WBC Committee shall direct the management of the Company to take such disciplinary or corrective action as the WBC Committee deems fit. It is clarified that any disciplinary or corrective action initiated against the Subject as a result of the findings of an investigation pursuant to this Policy shall adhere to the applicable personnel or staff conduct and disciplinary procedures.
All Protected Disclosures in writing or documented along with the results of investigation relating thereto shall be retained by the Company for a minimum period of seven years.
All employees shall be notified of the existence and contents of the Whistle Blower Policy by Human Resource Department and all other stakeholders including business partners and vendors by the respective HOD who interacts with the stakeholders in relation to the operation of the Company.
For significant disclosures, Management at their sole discretion may offer ‘Rewards to the Whistle Blower’ in the form of monetary awards and or Career path advancement, based on skills and capability.
The Company reserves its right to amend or modify this Policy in whole or in part, at any time without assigning any reason whatsoever. However, no such amendment or modification will be binding on the employees and directors unless the same is notified to the Employees in writing.
Gold Loans are sanctioned as Demand Loans against pledge of gold jewelry as collateral security. Loans are generally granted for a maximum tenure of 12 months or for any other periods as specified in the scheme under which the loan is availed.
As per the terms and conditions of sanction, the loan should be closed at the end of the maximum tenure specified along with interest. The ornaments are liable to be auctioned for realization of the dues, in case of non-redemption of the ornaments by the borrower by paying the dues on or before the due date as per the sanctioned tenure mentioned in the pledge letter.
Notwithstanding anything stated herein, the company reserves the right to recall the loan and auction the gold without waiting for expiry of the periods stipulated above in case of eventualities leading to probable loss on account of shortfall in the value of security due to fluctuations in Gold Price or any other reasons or any other contingencies, after giving a minimum of 14 days’ notice to the borrower.
However, the Company shall make earnest efforts to reduce the number of auctions by sending periodic communications to Customers for persuading them to release the jewellery by paying the dues.
In tune with the above guiding principles, the auction policy and procedure of the auction shall be as follows:
The term “Auction” used in the policy shall mean realization of the security created against the loan in public auction only.
i) One month before the loan due date ( i.e. In case of 12month scheme, at the end of 11th month)
Registered Legal Notice with auction date for probable loss accounts- One month before the loan due date (i.e. at the end of 11th month)
Registered Auction Notice- In case of EMI loans, all loans where there is continuing default of 2 EMI’s, at the end of 2nd default
ii) Immediately after loan due date (i.e. In case of 12month scheme, after 12 months)
Registered Auction Notice- Immediately after 12 months for all loans where 100% interest up to 12months has not been paid
iii) Remaining loans- After 2 months from loan due date (ie. In case of 12month scheme, after 14 months)
Registered Auction Notice- All loans which are remaining to be closed at the end of 14months
iv) As on any date
Registered Legal Notice with auction date for probable loss accounts identified as per Head Office directions for which registered notices were sent for increasing margin money and if not done within 30days.
No extension of loan period will be permitted in deviation of the above.
Auction proceeding will be completed within 3 months from the loan due date before which the borrower should close the loan
Requests for postponement of auction by branches/regional offices will not be enter- tained generally unless the Internal Audit dept. is convinced about the genuineness of the request
Part payment of Principal/Interest will be allowed at any point time upto loan closure due date as per the loan sanction. Thereafter, part payment is not allowed.
However, auction of the collateral security in a loan account will be conducted as per Auction Policy irrespective of the part payments made.
Branches should not credit to “Sundry Creditors a/c” any amount received from bor- rowers. Any amount credited to “Sundry Creditors a/c” will be appropriated towards shortfall in Auction.
Postponement of a scheduled auction shall not be allowed generally. However, it may be permitted by one more month if at least 100% interest dues are paid immediately and the loan is closed within one month.
If the loan is not repaid within one month, the auction will be carried out in such cases notwithstanding the remittance made towards interest.
1. Auction due to depletion in security value (auction before completion of tenure)
If the Company has a view that there is contingency on account of gold price fall, demand may be made on the borrower to repay a certain sum of money per gram of gold pledged by him with us to make good the shortfall or to pledge additional gold to bring the value of security on par with a certain advance rate per gram informed to him.
This may be done selectively customer wise, scheme wise or geography wise as decided by the Committee.
In the event of the Customer not obliging to the demand made by the Company within 14 days, Company shall trigger auction and shall send Registered Auction Notice.
2. Auction of gold ornaments identified as spurious/low quality
a).Accounts in which pledge of spurious/low quality gold ornaments have been detected subsequent to disbursement may be taken up for auction even before the completion of the tenure of the loan, from date of pledge subject to the undermentioned compliances. The said procedures shall also be followed for spurious/low quality accounts/pledges, identified at the auction centre or after completion of the tenure of the loan.
b). Proper notice/intimation shall be served upon the borrower as mentioned in point k(3).
c) Before serving the above notice the purity of the gold ornaments shall be re-verified internally through a competent officer/auditor. Melt test (assaying) of a small portion of the pledged gold may be resorted to for re-confirming the purity or in the “difficult to assess” cases.
d). The reserve price for such spurious/low purity ornaments shall be fixed keeping in view the reconfirmed assessed purity and the RBI directions issued from time to time. A realistic reserve price will be fixed as per the purity of the ornaments assessed.
e). Auction of normal/spurious or low quality gold ornaments shall not be taken up when police or criminal case has been filed against the borrower or when there is any other legal impediment.
Compliance of all formalities required for Auction as described in the following paras shall be ensured before conducting such Auctions.
1. Loan accounts for auction shall be identified and registered notices shall be sent as per the timelines prescribed above
2. Board approved Auctioneers appointed at various centers shall be assigned with the Auction process.
3. Registered Auction notice with acknowledgment due shall be served to all such identified borrowers giving 14 days’ notice period in order to ensure that sufficient time and opportunity are given to the customer for redemption and to avoid auction sale. Paper publication in a local daily in the local language and in another national daily in English shall be given clearly specifying the place, time and date of auction also giving time for redemption up to the close of business on the preceding date of proposed auction.
4. Surplus if any available in the auction sale proceeds over and above the dues within 30 working days after receipt of the full auction proceeds. A rightful lien will also be retained against such surplus subject to proper notice to the customer in case the borrower has other unsettled liabilities to the Company. s hall be refunded to the borrower after adjusting other dues if any. Steps including legal action for recovery of any short fall after appropriating the auction proceeds shall also be initiated where ever feasible and after analyzing the cost benefit. The refund of surplus will be sent by means of “A/c Payee” crossed cheque to the last known mailing address of the customer by Registered Post. Cheques for small amounts will be delivered to the customer through the Branch from where he has availed the loans. Wherever Bank details of the customers are available, the amount will be credited directly to their accounts.
In case the cover is returned undelivered due to any reason, efforts will be made to locate the customer and hand over the cheque to him.
Ornaments in unredeemed accounts listed for auction will be put up for sale through a public auction procedure wherein the prospective bidders participating in the auction shall quote their prices over and above the minimum fixed bid price in the open auction in accordance with Fair Practice Code for Bidders participating in the Auction detailing the Terms and Conditions of Auction. An auction will be carried out provided minimum 3 bidders are available as participants
The auction of unredeemed gold will be conducted in the same branch from where the customer has availed the loan by pledging gold, giving an opportunity to the customer also to participate in the gold auction. In case of auction at branches, the respective branch managers will be authorized by the Board approved auctioneer to conduct the auction on his behalf subject to following conditions.
a) One can participate in branch auction subject to deposit of EMD specified and submission of acceptable documents as ID proof, PAN card copy, GST registration.
b) A Customer who is coming to release his gold ornaments during branch auction, will be permitted to do so after paying the total outstanding or participate in the auction subject to compliance of the terms and conditions for participating in the auction.
In case of auctions scheduled at branches, the following records should be maintained irrespective of whether auctions are conducted or not. Such records should be authenticated by the Branch Manager as authorized representative of the Approved Auctioneer:
a. Details of auction participants.
b. Auction minutes.
In case of sale by auction conducted at branches/auction centres, the following registers/records also have to be maintained in addition to above
a. Bid register indicating the bid rate of all bidders
b. Sales Invoice
c. Detailed auction record
All the records maintained at the auction centre should be authenticated by the Board Approved Auctioneer who conduct the auction or his authorized representative
In case the auction could not be conducted at the branch on the scheduled auction day due to any reasons like lack of minimum number of bidders etc then the branch will display in the branch notice board, the centralized location where the next auction will be carried out subsequently with date of subsequent auction and the gold items will be lifted to the centralized location within the same town/taluk in which the loan was extended where the same will be sold through public auction. The auction notice and paper advertisement will clearly specify both the locations and the respective dates of auction. Auction will take place on date specified in newspaper or on subsequent dates.
Minimum bid price for each lot shall be fixed based on the following.
1. Prevailing Market price of gold based on the rates published by the Indian Bullion and Jewellers Association Ltd
2. Total dues to be received in the loan account which includes advance and interest up to the date of auction.
3. General quality of the gold (In case the ornaments are found to be of purity less than 22 carat, the company will be at liberty to quote a lesser floor price for the lot.
While auctioning the gold the reserve price for the pledged ornaments will not be less than 85% of the previous 30 day average closing price of 22 carat gold as declared by The Indian Bullion and Jewellers Association Ltd (IBJA) and value of the jewellery of lower purity in terms of carats will be proportionately reduced.
The bid shall be confirmed in favor of the bidder making the highest bid. In the eventuality of the bidders ganging up or forming a cartel for taking undue advantage etc., the right for postponement of the auction, to another date/Centre shall be exercised.
Bidders will be given a maximum period of 14 days from the date of confirmation of sale to remit the amount. In case of default the company has the right to either cancel the bid or allow further time up to a maximum of 14 days more and in case of such extension of time granted on genuine grounds, the company may charge interest @ 24% p.a. interest for the number of days from default from the date of confirmation of sale up to the date of remittance as decided by the company. Company may accept the bid of the bidder who has quoted the next higher amount in case the first bidder do not remit the bid amount within the time specified as above.
This condition will be incorporated in the agreement with the bidders.
Record of the auction proceedings authenticated by the Branch Manager, who is authorized by the approved auctioneer to conduct the auction process.
1. Postal Receipts for Registered Auction notices issued to borrowers.
2. Postal Acknowledgement from borrowers and Auction Notices returned undelivered.
3. Copies of the News Paper Auction Publications.
4. Details of Auction Participants.
5. Details of Auctioned items and Bidders where the details of bid price of all bidders will be recorded and the last bid price of all bidders will be recorded and authenticated by the board approved auctioneer.
6. Sales Invoices
7. In the annual reports the details of the auctions conducted during the financial year including the number of loan accounts, outstanding amounts, value fetched and whether any of its sister concerns participated in the auction should be disclosed.
8. Post auction, customers will be intimated the details such as the price fetched in the auction, total dues adjusted from the proceeds balance amount payable to/by him etc. Wherever refunds are involved the amount will be sent by account payee cheque at the address in the pledge letter.
1. Risk Management Committee consisting of the following members is authorized to examine individual cases and permit deviations from the above policy selectively or wholly or for a particular period of time as deemed fit by the Committee
1. CHIEF GENERAL MANAGER
2. GENERAL MANAGER (RISK MANAGEMENT&CREDIT CONTROL)
3. JT. GENERAL MANAGER ( AUDIT & INSPECTION)
2. Besides, Head of Risk Management Department and Head of Internal Audit Department are severally authorized to allow deviations in individual cases selectively or wholly on the above procedures , provided the loan is within 15months from the loan sanction date.
To provide loans to customers against gold jewelry as collateral security.
The loan is given as a demand loan.
All gold loans are sanctioned for a maximum tenor of 12 months unless otherwise specified under a particular scheme.
Any individual who is the lawful owner of the Gold Jewellery offered as security as per the declaration of ownership submitted by him and fulfilling the KYC norms as per RBI guidelines.
The loan can be extended to anyone who is having short term fund requirements like working capital for establishment/ expansion of business activity or meeting personal liquidity requirements or domestic needs including medical expenses etc. Loans shall not be used for any speculative or illegal or unlawful purposes violating the laws of the Country.
Quantum of finance will be decided on the basis of net weight of gold of 22 carat ornaments tendered as security, its purity and subject to RBI guidelines regarding loan to value.
Minimum amount per pledge: Rs. 1500 ( Rs. One Thousand Five Hundred only )
The minimum net weight of gold jewellery that can be considered for pledge is 2 grams. The ornaments shall be of minimum 22 carat purity. The weight of pearl, coral or any other stone or foreign material other than gold contained or forming part of the ornament irrespective of its value shall be deducted from the gross weight of the ornaments to arrive at the net weight for calculating the eligibility for the loan.
Interest and other charges to be levied shall be governed by the interest rate policy adopted by the Board. The Board, or a committee empowered by the Board shall review the interest rates and other charges periodically and make necessary revisions as per the business requirements. Any revision in interest shall only be with prospective effect.
Interest and other charges to be levied on the loan shall be as per the schemes formulated and amended from time to time. The interest rates shall be decided based on gradation of risk, the underlying principle being higher the risk higher the interest, within the ceiling rate decided by the Company.
The interest shall be calculated for the actual number of days the loan remains outstanding, including the date of loan disbursement and the date of closure. However, if the borrower closes the loan within 7 days from the date of disbursement, then a minimum interest for 7 days shall be payable. If the amount of interest so calculated is less than Rs.50/- then a minimum interest of Rs.50/- will be charged. A rebate in interest rate may be provided for encouraging timely repayment of interest or closure of the loan on or before the specified tenor as per the scheme.
A grace period up to 3 days on due date may be allowed in payment of dues at the discretion of the Company.
For the purpose of calculation of interest a year will be reckoned as 360 days and a month as 30 days. Interest is calculated on 30 days compounding basis.
In the event of failure on the part of the borrower to close the loan along with interest and other charges on the due date or within the grace period permitted, penal interest as decided by the Company from time to time and intimated to the borrower shall be charged over and above the regular interest prospectively.
In addition to interest the Company may levy other charges as below. The rate at which such charges are to be levied shall be decided by the Board or a Committee empowered by the Board for fixing interest rates and other charges.
1. Security Charges
2. Processing charges
3. Service Charges
4. Documentation Charges
5. Notice Charges
6. Charges for lost tokens
7. SMs Charges
8. Auction expenses
9. Cheque re-issue charges
10. Any other charges as decided by the Board or the Committee empowered by the Board.
1. Loan Application
2. Demand Promissory Note and take delivery letter.
3. Terms and Conditions Letter, which also includes declarations and undertakings by the borrower and acknowledged by him and any other documents that may be specified by the Company.
4. Consent to obtain Aadhaar details for authentication with UIDAI for “eKYC” purpose.
Any one or more of the following Documents specified by RBI as address/ID proof for completing the KYC of the customer
Identity Proof: Passport/PAN/Driving License/Voter ID card/Ration Card/ Aadhar Card or any other identity card issued by a government authority, PSU or nationalized bank, containing the photograph of the customer
Address proof: If any of the documents taken as identity proof also contains the address of the borrower, no separate address proof is insisted upon . In other cases, the following documents can be taken towards address proof:
Ration card/latest electricity/landline telephone bills/bank passbook/bank/ Aadhar Card or any other documents issued by a government authority, PSU or nationalized bank, containing the address of the customer
1. Gross weight of the jewellery to be taken and appraised for assessing the purity. Purity Check shall be conducted as per the various methods prescribed by the Company to make sure that the jewellery offered for pledge is of an acceptable level of purity.
2. Net weight of the jewellery to be arrived at after deducting the weight of stones embedded in the ornament. Appraiser to sign the appraisal form as proof of having done the appraisal.
3. Jewellery to be packed securely along with the weight slip and kept in the strong room/safe.
4. Separate packets to be prepared for each loan.
Before disbursement of the loan, branch executives should enquire with the customers about the ownership of the jewellery being pledged for loan and the loan should be granted only after they are convinced about the genuineness of the borrower and his capacity to own that much quantity of gold. In addition to the above, customers are also required to sign a Declaration of ownership of jewellery offered as security for the loan.
In cases where the weight of the gold jewellery pledged by a borrower at any one time or cumulatively on various loans outstanding is more than 20grams, the declaration should also contain an explanation specifically as to how the ownership was vested with the customer(For eg. Inherited, received as gift, purchased etc).
A certificate of purity of the gold jewellery pledged as security for the loan will be incorporated in the Sanction Letter given to the borrower for the limited purpose of determining the maximum permissible loan and arriving at the reserve price for auction.
Only gold jewellery of 22 carat will be accepted as security for the loan. However, in case the purity of the jewellery is found to be less than 22 carat, an option can be exercised by the Company to translate the collateral into 22 carat and state the exact grams of the security accordingly.
Since the purity certificate is issued purely based on the declaration given by the borrower and the standard methods of verification adopted by the Company and in the absence of any fool proof method of assessing the purity of gold, no disputes/claims based on the certificate will be entertained by the Company.
The ceiling rate for granting the loan conforming to the guidelines issued by RBI from time to time as also the rate per gram under each scheme shall be updated in the CBS and advised to Branches periodically.
Change in rate of interest and schemes will also be updated in the CBS and intimated to branches periodically from Corporate Office.
Utmost care is to be taken to ensure the safety of the ornaments pledged by the customer. With this in view the following arrangements shall be in place in all the Branches.
1. Strong rooms or FBR safes.
2. Armed guard(s)/watchman at vulnerable Branches as decided by the Company.
3 .Burglar alarms, Closed Circuit Cameras and such other devices as deemed necessary shall be installed in vulnerable Branches.
4. Insurance cover against burglary/fire/natural calamities or such other risks the Company may decide to insure against.
The adequacy of the safety measures put in place as also the insurance cover shall be reviewed on an ongoing basis.
1. Melted bar /Primary Gold
2. Jewellery of a temple/church or any religious institutions.
3. Item specified by the Company in the negative list updated from time to time.
4. Items where the borrower is unable to give a proof or declaration of ownership.
5. Items which are not permitted to be taken as security by RBI
Jewellery shall be released to the same customer on receipt of full dues including the principal, interest, penal interest and other charges, if any. Release, whether partial or in full can be done only after verification of signature, original KYC documents & customer copy of the original pawn ticket (Token). If token is lost indemnity in stamp paper of required value to be obtained before release of jewellery. In case the customer is deceased, the ornament will be delivered to the legal heirs as per the procedure stipulated by the Company for settlement of Deceased Loan accounts
All kinds of fraudulent activities or attempt to defraud, whether it is by the employees or outsiders, must be brought to the knowledge of the Management as soon as it is detected for proper action as per company guidelines.
On finding Spurious or stolen gold pledge attempt, following steps shall be taken by the branch
Attempt by any suspicious customer trying to pledge stolen /spurious jewellery should immediately be reported to the Chief Vigilance Officer at Corporate Office and the Vigilance Officer at the Regional Office and to the local police.
All Branches will be periodically inspected and audited by internal audit staff at intervals specified by the Company. The audit Department will, at random, verify the quantity and purity of gold ornaments accepted by Branches for pledge. They will also audit various accounting procedures followed at Branches and ensure that the circular instructions issued by the Company from time to time are strictly being adhered to.
If the loan account is not closed on completion of tenure and even after sending reminders through SMS, notices/Registered notices at frequencies stipulated by the Company, the ornaments will be auctioned after giving a minimum of 14 day’s prior notice by way of an auction notice sent by an authorized auctioneer. The auction will be announced to the public through advertisements published in at least 2 newspapers, one in vernacular language and another in a national daily newspaper. Muthoot Finance, its Group Companies and its other related entities will not be allowed to take part as a bidder in auction to ensure that there is an arms length relationship in all transactions during an auction process. The borrower, if he chooses, can participate in the auction process complying with the conditions stipulated by the Company/auctioneer.
The proceeds of auction, net of auction related expenses and incidental charges shall be appropriated towards the loan outstanding. The Company may decide to recover the shortfall, if any, after such appropriation by resorting to various steps including legal action. Excess, if any, shall be refunded to the customer. GST as applicable will be recovered.
Procedure as outlined in the auction policy approved by the Board to be followed.
All the employees, as soon as they are inducted into the Company shall be trained on methods of assessing the purity of the ornaments. Refresher programme will be conducted to keep them updated.
1. The Company may grant both secured and unsecured loans to individuals, Companies, firms, trusts and other entities as per the emerging business needs.
In case the loans are given without any primary/collateral security, like unsecured personal loans and other clean loans, more than ordinary care will be taken to see that such loans are granted only to persons/firms/Companies of repute with credit worthiness and track record. Any lending other than against the pledge of gold jewellery as collateral security will be subject to the maximum exposure limit of 15% of the net owned funds of Muthoot Finance Ltd. The rate of interest will be decided on a case to case basis taking into account various factors like the cost of funds, operational expenses, risk attached to the advance etc but will be subject to the ceiling on the maximum interest rate chargeable as per the Fair Practices Code of the Company.
2. The Company may also grant secured and unsecured loans to its employees and employees of its group companies in accordance with their eligibility and other terms and conditions fixed from time to time.
To provide secured/unsecured loans to individuals for meeting any financial need/purposes
Personal loans will be extended mainly to salaried employees of Public Sector units, other reputed institutions and self-employed individuals. All other individuals who are willing to provide 100% collateral security in the form of NSCs, RBI bonds, LIC policies, or any other tangible security will also be eligible to avail personal loans.
The loan will be granted for meeting any personal purposes including consumption needs.
While personal guarantee of another person may not be insisted upon in the case of fully secured loans at the discretion of the sanctioning authority, guarantee of a third party drawing the same or higher salary and having the same or higher take home pay or any other person acceptable to the Company may be insisted in the case of unsecured personal loans granted to salaried individuals.
Loans will be granted to individuals only after the Company is satisfied about the credit worthiness, integrity, local standing and repayment capacity of each borrower.
As a general rule unsecured personal loan will not be granted to any person who does not have regular verifiable income.
The loan will be sanctioned as a Demand Loan, repayable on demand, for a maximum tenure of 60 months. The Company may, at the request of the borrower, allow repayment in convenient instalments or equated monthly instalments.
The quantum of finance will be decided mainly on the basis of the borrowers’ repaying capacity and the value of security provided.
Interest rates will be fixed on the basis of risk assessment, cost of funds, cost of operations etc and may differ for different schemes and different categories of borrowers. Processing charges as decided from time to time will be recovered.
Salary certificate for salaried persons and IT returns for the last 3 years for others and any other additional documents as per the decisions of sanctioning authority will be insisted upon.
Demand Promissory Note/Agreement, ACH mandate, undertaking from borrowers for deducting instalments from salary. Ceiling on net take home pay will be fixed in the case of salaried people to ensure prompt repayment.
The Company will be free to modify the terms and conditions of the loan scheme anytime without giving any notice, which will be made applicable prospectively. The Company may stipulate fulfillment of certain minimum criteria like age, net salary, total years of service, years of service left, owning a house etc depending upon the risk profile of the person and will have the right to reject any application for nonfulfillment of any of the criteria or without assigning any reason.
With a view to retaining existing personal loan customers a pre- approved top up loan facility can be made available. Existing customers with excellent track record of repayment can be offered pre-approved top up loans as per their eligibility. This will help to build an incremental portfolio growth. Track record of minimum 12 months or a lesser period EMI payment as found suitable may be used as a yardstick to offer such loans to existing borrowers. The top up loan shall be as a percentage of the original loan depending upon the period of track record of prompt EMI repayment reckoned and as decided by the management. Facility of data scrub as mentioned below also can be used to identify track record of repayment of loans from other lending institutions. Such top-up loans can be granted to eligible existing customers in the salaried and other segments
Considering the opportunities available for lending to the above segment, instruments available to measure and mitigate risks, lending to non – salaried segment also can be made. CIBIL score and data scrub on our existing customers by reputed credit information agencies like CRIF High Marks may be used to identify potential customers in this segment with excellent track record and very low / low credit risk profile. Prospective customers identified by Fintech companies through their digital marketing platform can also be considered for financing subject to fulfillment of the eligibility criteria stipulated by the Company for granting unsecured loans
Employees of Muthoot Finance and all other Divisions of the Muthoot Group with a minimum service of 5 years can be granted loans for meeting personal needs. Such loans can be granted at a rate of interest of 15% p.a. and repayable within a maximum period of 24 months. The maximum limit for such loans will be Rs.1 lakh for Supervisory staff and Rs.50,000/- for Non-Supervisory staff. Modification to terms and conditions can be approved by a Committee constituted by Board.
Unsecured loan up to 60 times the net monthly rent payable can be granted to owners of premises occupied by our branches / offices. In the case of branches, the Gold Loan outstanding should not be less than Rs.3 crores. The loan is to be repaid in EMIs within a maximum period of 84 months from the monthly rent payable. The remaining lease period should be more than the repayment period of the loan. The minimum rate of interest will be 18% p.a. and maximum 19% p.a. Service Charges @1% of the loan also to be collected. Modification to terms and conditions can be approved by a Committee constituted by Board.
Many of our customers availing gold loans belong to traders and self – employed category. With a view to attract such customers and to retain them with us, loans can be granted to them based on their income earning and repayment capacity duly backed by a good credit history as revealed by their CIBIL Reports. New customers not having relationship with us may also be considered. The loan will be unsecured. Spouse will be a co-obligant for such loans. If no spouse, co-obligancy by a suitable close relative like father, brother etc. to be insisted upon
Salient features of the scheme are given below.
Wholesale and retail traders, Self-employed professionals like allopathic doctors, chartered accountants, company secretaries and architects.
For any genuine business purpose (Working capital requirements, acquisition /repair/ renovation of fixed assets/ equipments / machinery etc). Loans for personal purpose will not be granted under the scheme.
Quantum of finance
As decided by management from time to time. Initially minimum loan amount may be Rs 50,000 and maximum Rs 1L.
Any officially valid documents for completing KYC as given below.
Identity proof: Passport / Voters ID card/ Driving License/PAN Card/Aadhar Card
Address Proof: Passport / Voters ID card/ Driving License/PAN Card/Aadhar Card Ration card Tel/ Electricity Bill/ Lease agreement.
Repayment By way of monthly EMI. EMI can be paid through ACH mandate and credited to a dedicated account. Other modes of repayment also can be made.
Interest and charges including penal interest
Interest rates will be fixed on the basis of risk assessment, cost of funds, cost of operations etc and may differ for different schemes and different categories of borrowers. Processing charges as decided from time to time will be recovered.
Minimum three months and maximum 24 months
1. Application form
2. Loan Agreement
4. DP Note Delivery Letter
5. Post dated cheque Acknowledgement letter
6. Request for disbursal of loan amount
7. ACH mandate
Sourcing and recovery shall be by MFIN branches. If found necessary services of outside agencies can be availed.
Asset classification and income recognition in case of all loans sanctioned under the various schemes formulated to cater to different segments, will be as per the norms prescribed by Reserve Bank of India from time to time.
The Company may, with a view to augmenting its non-fund based income, enter into arrangements with any Company or entity for selling Insurance, Mutual fund or any other products, strictly within the norms prescribed by the regulators in the respective area and those stipulated by Reserve Bank of India from time to time. .
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