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Fair Practice

Fair practices by setting minimum standards in dealing with customers

1.1 Objectives of the Code:

  1. To promote good and Fair Practices by setting minimum standards in dealing with customers.
  2. To provide full information/knowledge to customers regarding the products and services offered by MHFSL so as to enable them to take informed decision.
  3. To increase transparency, so that, customers can have better understanding of what they can reasonably expect of the services.
  4. To encourage market forces through competition, in order to achieve higher operating standards.
  5. To promote a fair and cordial relationship between the customer and MHFSL.
  6. To foster confidence in MHFSL in particular and the housing finance system in India in general.

1.2 Application of the Code:

This Code shall apply to all the products and services whether they are provided by MHFSL or Digital Lending Platforms (self-owned and/or under an outsourcing arrangement) across the counter, over the phone, by post, through interactive electronic devices, on the internet or by any other method.

2.1 To act fairly and reasonably in all dealings with customers by ensuring the following:-

  1. MHFSL will meet the commitments and standard in this Code in respect of the products and services offered by it and also in the procedure and practices that are followed by the staff members.
  2. The products and services offered by MHFSL will conform to relevant laws and regulations in letter and spirit
  3. The dealings of MHFSL with customers would rest on ethical principles of integrity and transparency.

2.2 To help customers understand how their financial products and services work. This will be done by:-

  1. Providing customers information about the products and services offered by MHFSL in vernacular language or language as understood by the customer and appropriate regional language.
  2. It will be ensured that advertisement and promotional literature of MHFSL is clear and not mis-leading.
  3. It will be ensured that customers are given clear information about the products and services of MHFSL. The terms and conditions, interest rates, processing & administrative charges and other miscellaneous charges which apply will be made clear to them.
  4. MHFSL will ensure that customers are given information regarding the benefits accruing to them, the manner of availing the benefits, their financial implications and whom they can contact for addressing their queries and the manner of addressing the queries.

2.3 To help customers to use the products and services by:-

  1. Providing them regular and appropriate up-dates
  2. Keeping them informed about changes in the interest rate, charges or terms and conditions.

2.4 To deal quickly and sympathetically with things that go wrong by:-

  1. Rectifying the mistakes promptly and reversing charges applied due to mistakes, promptly.
  2. Attending to complaints of customers promptly
  3. Giving suitable advice to customers regarding manner of taking their complaints forward if they are not satisfied with the handling of the complaint
  4. Providing suitable alternative avenues to alleviate problems arising out of technological failures.

2.5 To treat all personal information of customers as private and confidential.

MHFSL shall treat all personal information relating to customers as private and confidential, subject to what is stated in paragraph No.5 elsewhere.

2.6 To publicise the Code of MHFSL – MHFSL shall:-

  1. Provide existing/and new customers with a copy of the Code
  2. Make the Code available on request, either over the counter or by electronic communication or mail
  3. Make available this code at every branch of the MHFSL and on website and
  4. Ensure that the staffs of MHFSL are trained to provide relevant information about the code and to put the code into practice.

2.7 To adopt and practise a non-discrimination policy, MHFSL shall not discriminate on the basis of age, race, caste, gender, marital status, religion or disability of customers.

3.1 MHFSL shall provide information on interest rates, processing and administrative fees, other charges, etc through any one of the following:-

  • Through notices on the notice boards in their branches
  • Through telephone or help lines
  • Through designated staff/help desk
  • Through providing service guide/tariff schedule
  • Through providing information at the personal level, during the visit of customers
  • By providing information on the website of MHFSL
  • 3.2 In respect of prospective customers, MHFSL shall:-

  • Provide clear information explaining the key features of its services and products
  • Provide information on any type of product and service offered that may suit the needs of the customer
  • Inform the customers about the various means through which, product and services are offered
  • Inform the customers the details required from them for the purpose of identify and address for complying with legal, regulatory and internal policy requirements.
  • 3.3 To the existing customers, MHFSL shall:-

  • Provide more information on the key features of the products including application of interest rates, fees and charges on request
  • Provide extra information on their rights and responsibilities, especially regarding availment of nominational facility offered in respect of deposit accounts.
  • Automatically register the customer’s name under `do not call’ service. MHFSL shall not inform/explain through telephone calls, SMS EMAILs, any new product/service unless and until the party himself/herself informs MHFSL in writing his/her consent to avail of this information/service.
  • 3. DISCLOSURE AND TRANSPARENCY:

    3.1 MHFSL shall provide information on interest rates, processing and administrative fees, other charges, etc through any one of the following:-

  • Through notices on the notice boards in their branches
  • Through telephone or help lines
  • Through designated staff/help desk
  • Through providing service guide/tariff schedule
  • Through providing information at the personal level, during the visit of customers
  • By providing information on the website of MHFSL
  • 3.2 In respect of prospective customers, MHFSL shall:-

  • Provide clear information explaining the key features of its services and products
  • Provide information on any type of product and service offered that may suit the needs of the customer
  • Inform the customers about the various means through which, product and services are offered
  • Inform the customers the details required from them for the purpose of identify and address for complying with legal, regulatory and internal policy requirements.
  • 3.3 To the existing customers, MHFSL shall:-

  • Provide more information on the key features of the products including application of interest rates, fees and charges on request
  • Provide extra information on their rights and responsibilities, especially regarding availment of nominational facility offered in respect of deposit accounts.
  • Automatically register the customer’s name under `do not call’ service. MHFSL shall not inform/explain through telephone calls, SMS EMAILs, any new product/service unless and until the party himself/herself informs MHFSL in writing his/her consent to avail of this information/service.
  • 4.1 MHFSL shall:-

    1. Ensure that all advertising and promotional material is clear and factual.
    2. In any advertisement, in any media and promotional literature that draws attention to a service or product and includes a reference to an interest rate, MHFSL shall also indicate whether other fees and charges will apply and that full details of the relevant terms and conditions be made available on request or on website.
    3. If MHFSL avails of services of third parties for providing support services, MHFSL shall require that such third parties handle customers’ personal information with same degree or confidentiality and security, as the MHFSL would.
    4. MHFSL may, from time to time, indicate to the customers various features of their products availed by them. Information about other products or promotional offers in respect of products/services may be conveyed to the customers only if he/she gives his/her consent to receive such information/service either by mail or by registering the same on the website or on customer service number.
    5. MHFSL shall provide information on interest rates, common fees and charges (including penal interest, if any) through putting up notices in their branches; through telephone or help-lines; on the company’s website; through designated staff/help desk; or providing service guide/tariff schedule.
    6. MHFSL shall prescribe a Code of Conduct for their DMAs, whose services are available to market products/services which among other matters require them to identify themselves when they approach the customers for selling products personally or through phone.
    7. MHFSL shall adopt the Model Code of Conducts for Directing Selling Agents (DSAs)/Direct Marketing Agents (DMAs) as per Annex X with the approval of the Board.
    8. In the event of receipt of any complaint from the customer that the representative of MHFSL/DMA has engaged in any improper conduct or acted in violation of this Code, appropriate steps shall be initiated by MHFSL to investigate and to handle the complaint and to make good the loss.

    5.1 All personal information of customers shall be treated as private and confidential, even after they cease to be customers and shall be guided by following principles and policies. MHFSL shall not reveal any information or data relating to customer’s accounts whether provided by the customer or otherwise, to any one, including other companies, entities in their group, other than in the following exceptional cases.

    1. If the information is to be given as per law
    2. If there is a duty towards the public to reveal the information
    3. If the interests of MHFSL require them to give information -

    e.g to prevent a fraud. But, MHFSL shall not use the same for giving information about the customer/customer account to any one else, including other companies in the group or for marketing purposes.

    1. If the customers ask MHFSL to reveal information or with the customers’ permission, then only, the information will be revealed.
    2. If MHFSL is asked to give reference about the customers, MHFSL will obtain customers written permission, before giving the information.
    3. The customer shall be informed the extent of his/her rights under the existing legal frame-work for accessing the personal records that MHFSL maintains about him/her.
    4. MHFSL shall not use customers’ personal information for marketing purposes of anyone, including its own marketing staff, unless the customer specifically authorises the MHFSL to do so.

    5.2 Credit Reference Agencies:-

    1. When a customer opens an account, MHFSL shall inform him/her when they may pass his/her account, details to credit reference agencies and the checks MHFSL may make with them.
    2. b) MHFSL may give information to credit reference agencies about the personal debts the customer owes them, if:-
      1. The customer has fallen behind with his repayments
      2. The amount owed is not in dispute and
      3. The customer has not made proposals that the MHFSL is satisfied with, for repaying his/her debt, following MHFSL’s formal demand
      4. In these cases, MHFSL shall intimate the customers in writing that they plan to give information about the debts the customer owes them, to the credit reference agencies. At the same time, MHFSL shall explain to the customers the role of credit reference agencies and the effect the information they provide, can have on customers’ ability to get credit.
      5. MHFSL may give credit reference agencies other information about the customer’s account, if the customer has given his/her permission to do so.
      6. A copy of the information given to credit reference agencies shall be provided by the MHFSL to a customer, if so demanded.

    6.1 While giving loans, MHFSL shall explain to the customers the repayment process by way of amount, tenure and periodicity of payment. This will be made clear in the loan offer letter. However, if the customer does not adhere to the repayment programme, a defined process, in accordance with the laws of the land, shall be followed for recovery of dues. The process will involve – reminding the customer by phone, by sending him/her notice or by making personal visits and any other steps, including re-possession of security, if any. If the recovery action is in terms of the provisions of SARFAESI Act, then the procedure as prescribed in the SARFAESI Act/rules there under shall be followed.

    6.2 MHFSL’s collection policy shall be built on courtesy, fair treatment and persuasion. MHFSL believes in fostering customer confidence and long term relationship, Staff of MHFSL or any person, authorised to represent MHFSL. In collection of dues and security re-possession, shall identify himself/herself and display the authority letter issued by MHFSL and upon request, display his identity card issued by the MHFSL or under authority of the company. MHFSL shall provide customers with all the information regarding dues and shall endeavour to give sufficient notice for payment of dues.

    6.3 All the members of staff of MHFSL or any person authorised by the company to represent it, in the collection or security re-possession, shall follow the guidelines given below:-

    1. Customer should be contacted ordinarily at the place of his choice and in the absence of any specified place, at the place of his residence and if un-available at the residence, at the place of his business/occupation.
    2. Identity and authority to represent MHFSL should be made known to the customer at the first instance.
    3. Customers’ privacy should be respected
    4. Interaction with the customers shall be in a very civil manner.
    5. MHFSL’s representatives shall contact the customer between 7AM and 7PM on any day, unless special circumstances of the customer’s business or occupation require otherwise.
    6. Customers’ request to avoid calls at a particular place and at a particular time shall be honoured, as far as possible.
    7. Time and number of calls and contents of conversation should be documented.
    8. All assistance should be given to resolve disputes or differences regarding dues in a mutually acceptable and in an orderly manner.
    9. During visits to customers’ place for collection of dues, decency and decorum should be maintained.
    10. Improper occasions, such as bereavement in the family, ill-health or such other calamitous occasions should be avoided for making calls/visits to collect the dues.
    1. MHFSL shall have a system and procedure for receiving, registering and disposing of complaints and grievances in each of its branches or offices, including those received on-line.
    2. If a complaint has been received in writing from a customer, MHFSL shall entitle to send him/her an acknowledgement/response within a week. The acknowledgement should contain name and designation of the official who will deal with the grievances. If the complaint is relayed over phone at MHFSL’s designated telephone help desk or customer service number, the customer shall be provided with a complaint reference number and be kept informed of the progress within a reasonable period of time.
    3. If the customer wants to make a complaint he/she should be told:-
      1. How to do
      2. Where a complaint can be made
      3. How a complaint should be made
      4. When a reply can be expected
      5. Whom to approach for redressal
      6. What to do if the customer is not satisfied about the reply/outcome
      7. The staff of MHFSL shall help the customer regarding any questions the customer has
    4. Customer should be told where to find details of MHFSL’s procedure for handling complaints fairly and quickly.
    5. After examining the complaint, MHFSL shall send the customer its final response or explanation why it needs more time to respond and shall endeavour to do so within six weeks of receipt of the complaint and he/she should be informed how to take his/her complaint further if he/she is not still satisfied.
    6. MHFSL shall publicise its grievance redressal procedure (EMAIL ID and other contact details at which the complaints can be lodged, turn around time for resolve the issue, matrix for escalation, etc) for lodging the complaint by the aggrieved borrower and ensure specifically that it is made available on its website. MHFSL shall clearly display in all its offices/branches and on the website that in case the complainant does not receive response from MHFSL within a period of one month or is dis-satisfied with the response received, the complainant may approach the Complaint Redressal Cell of National Housing Bank by lodging his/her complaint on-line on the website of NHB or through Post to “The National Housing Bank, Core 5-A, 3rd to 5th Floor, India Habitat Centre, Lodhi Road, New Delhi – 110 003”.

    8.1 MHFSL shall carry out due diligence as required under KYC Guidelines, before opening an account and allowing operation.

    1. Ask the customer to provide necessary documents/proof
    2. Obtain only such information to meet the KYC/Anti Money Laundering or any statutory requirements. In case, any additional information is sought, it will be sought separately and the company will specify the objective of obtaining such additional information. Providing such additional information will be `voluntary’.
    3. Provide the account opening forms and other material to the customer. The same shall contain details of essential information required to be furnished and documents to be produced for verification and/or for record for meeting the KYC requirements.
    4. Explain the procedural formalities and provide necessary clarifications sought by the customer, while opening the account.

    9.1 Information:-

    1. When a customer opens a deposit account, MHFSL shall inform the rate of interest on his fixed/recurring deposit accounts, how interest is calculated and its periodicity. For deposit accounts like, recurring deposit account, the customer should be informed about the charges, which will be levied in case of delayed payment of periodical instalments in the account by the customer. Details of the charges should be included in the tariff schedule.
    2. MHFSL shall inform different types of accounts that can be opened, such as fixed deposits, GLCC, etc MHFSL will also explain the implications of opening the accounts in various styles, such as, single, joint name, joint with either or survivor clause, joint with former or survivor clause or in any other style or with nomination facilities, at the time of opening of the account.

    9.2 Premature withdrawal of deposits:-

    1. The procedure pertaining to premature withdrawal of term deposits/GLCC shall be informed to the depositor, disclosing the interest rate applicable, policy for premature withdrawal of deposits, etc.
    2. Brokerage paid to the broker for mobilising the deposits, should not be recovered from the borrower, if the borrower decides to pre-close his/her deposit account with our company, for whatever reason.

    9.3 Renewal of overdue term deposits: MHFSL shall inform the customers the interest rate applicable in case they renew the deposits after the date of maturity.

    9.4 Loans against deposits (LDs): MHFSL shall clearly explain the facility of loan against deposits available, if any.

    9.5 Accounts of Minors: MHFSL shall inform customers, on enquiry, how a deposit account can be opened in the name of a minor.

    9.6 Special Accounts: MHFSL shall endeavour to make it easy and convenient for special customers, like senior citizens, physically challenged persons and illiterate persons to deal with them. MHFSL will formulate convenient policies, products and services for such applicants and customers. MHFSL will also inform the procedure for opening of the account and other terms and conditions to blind and physically challenged persons provided, he/she calls on its branch personally, along with a witness, who is known both to such person and branch of the MHFSL.

    9.7 Settlement of claim in respect of deceased account holders:

    1. Accounts with survivor/nominee clause: In case of deposit account of a deceased depositor, where the depositor had utilised the nomination facility and made a valid nomination or where the account was opened with the survivorship clause (either or survivor or anyone or survivor or former or survivor or latter or survivor) the payment of the balance in the deposit account to the survivor/nominee of the deceased account holder shall be made, provided:-
      1. The identify of the survivor/nominee and the fact of the death of the account holder is established through appropriate documentary evidence
      2. There is no order from a competent court/other statutory authority, restraining MHFSL from making the payment from the account of the deceased; and
      3. It has been made clear to the survivor/nominee that he/she would be receiving the payment from MHFSL as a `Trustee’ of the legal heirs of the deceased i.e. said payment to him/her shall not affect the right or claim which any person may have, against the survivor/nominee to whom the payment is made.
    2. The payment made to the survivor/nominee subject to the above conditions would constitute a full discharge of MHFSL’s liability. In such case, payment to survivor/nominee of the deceased depositors will be made without insisting on production of succession certificate or letter of administration or probate or obtaining any bond of indemnity or surety from the survivors/nominee, irrespective of the amount standing to the credit of the deceased account holder.
    3. Accounts without survivor/nominee clause: In case where deceased depositor had not made any nomination or for the account other than those styled as `either or survivor’ (such as single or jointly operated accounts), MHFSL shall adopt a simplified procedure for repayment to the legal heirs of the depositor, keeping in view the imperative need to avoid inconvenience and undue hardship to the common man. Keeping in view MHFSL’s risk management system, MHFSL has fixed a minimum threshold limit for the amount up to which, claims in respect of deceased depositor could be settled without insisting on production of any documentary evidence, other than a letter of indemnity.
    4. Premature termination of term deposit accounts: In case of term deposits, MHFSL shall incorporate a clause in the account opening form itself, to the effect that in the event of death of the depositor, premature termination of term deposits would be allowed, subject to the provisions of Housing Finance Companies (NHB) Directions, 2001. The conditions subject to which, such premature withdrawal would be permitted will also be specified in the account opening form.
    5. Time limit for settlement of claims: MHFSL shall endeavour to settle the claims in respect of deceased depositors and release payments to survivors/nominees within a period, not exceeding 15 days from the date of receipt of claim, subject to production of proof of death of the depositor and suitable identification of the claims to the satisfaction of MHFSL.

    10.1 Before granting loans, MHFSL shall assess whether customer will be able to repay the loan. If MHFSL cannot sanction the loan to the customer, it shall communicate in writing the reasons for the rejection. If the customer wants the MHFSL to accept a guarantee or other security for his/her liabilities, MHFSL may ask the customers for his permission to give confidential information about the financial position of the person, willing to give guarantee or other indemnity or other security or to their legal advisor. MHFSL may also:-

    1. Encourage the customers to take independent legal advice to make sure that they understand their commitment and possible consequences of their decision.
    2. Inform the customers that by giving the guarantee or other security, they may also become liable and
    3. Tell them what their liability would be

    10.2 Applications for loans and their processing:

    1. All communications to the loan applicant/ borrower shall be in the vernacular language or a language as understood by the applicant/borrower.
    2. MHFSL shall transparently disclose to the loan applicant/borrower all information about fees, charges payable for processing, loan application, the amount of fees refundable if the loan is not sanctioned/disposed, pre-payment options and charges if any, penal interest/penalty for default payment if any, conversion charges for switching the loan from fixed to floating rates or vice-versa, existence of any interest reset clause and any other matter which affects the interest of the borrower. In other words, MHFSL must disclose `all in cost’ inclusive of all charges involved in processing/sanctioning of the loan application in a transparent manner. It should also be ensured that such charges or fees are non-discriminatory.
    3. Loan application forms shall include necessary information which affects the interest of the borrower so that a meaningful comparison with the terms and conditions offered by other HFCs/Banks can be made and informed decision can be taken by the borrower. The loan application form may indicate the list of documents required to be submitted with the application form.
    4. MHFSL shall devise a system of giving acknowledgement for receipt of all loan applications. Preferably, the time frame within which the loan application will be disposed should also be indicated in the acknowledgement.
    5. Normally all particulars required for processing the loan application shall be collected by MHFSL at the time of application. In case it needs any additional information, the customer should be told immediately that he/she would be contacted again.
    6. MHFSL shall convey in writing to the borrower in the vernacular language or in a language as understood by the borrower by means of sanction advice/loan offer letter. The amount of loan sanctioned along with all terms and conditions including annualised rate of interest, method of application, EMI structure, repayment charges penal interest if any and keep the written acceptance of these terms and conditions by the borrower on its record.
    7. MHFSL shall mention the penal interest/rate of overdue charges for late repayment in bold in the loan agreement.
    8. MHFSL shall invariably furnish copy of the loan agreement along with a copy of each of the enclosures quoted in the loan agreement to the borrower at the time of sanction/disbursement of the loan against acknowledgement.
    9. If MHFSL cannot provide the loan to the customer, it shall communicate in writing the reasons for rejection.
    10. MHFSL shall not discriminate on grounds of sex, caste, religion, etc in the matter of sanctioning the loan.

    10.3 A. Disbursement of loans including changes in terms and conditions:

    1. Disbursement should be made in accordance with the disbursement schedule given in the Loan Agreement/Sanction Letter.
    2. MHFSL shall give notice to the borrower in a vernacular language or a language as understood by the borrower of any change in the terms and conditions including disbursement schedule, interest rates, penal interest if any, service charges, pre-payment charges, other applicable fees/charges etc. MHFSL should also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard should be incorporated in the loan agreement.
    3. If changes in terms are to the disadvantage of the customer, he/she may within 60 days and without notice close his/her account or switch it without having to pay any extra charges or interest.
    4. Decision to recall/accelerate payment or performance under the agreement or seeking additional securities should be in consonance with the loan agreement.
    5. MHFSL shall release all securities on repayment of all dues or on realisation of the outstanding amount of the loan, subject to any legitimate right or lien for any other claim, MHFSL may have against the borrower. If such right of set off is to be exercised, the borrowers shall be given notice about the same with full particulars about the remaining claims and the conditions under which MHFSL is entitled to retain the securities till relevant claim is settled/paid.

    10.3 B. Guarantors: When a person is coming forward to be a guarantor to a loan, he/she shall be informed about:-

    1. His/her liability as a guarantor
    2. The amount of liability he/she will be committing himself/herself to MHFSL
    3. Circumstances in which MHFSL will call on him/her to pay the liability
    4. Whether MHFSL has recourse to his/her other assets/moneys in the company, if he/she fails to pay the amount as a guarantor.
    5. Whether his/her liabilities as guarantor are limited to a specific quantum or un-limited and
    6. Time and the circumstance in which, his/her liabilities as a guarantor, will be discharged as also the manner in which MHFSL will notify him/her about the same.
    7. The customer shall be informed the extent of his/her rights under the existing legal framework for accessing the personal records that MHFSL holds about him/her.
    8. MHFSL shall not use customer’s personal information for marketing purposes by anyone, unless the customer specifically authorises them to do.
    9. MHFSL shall keep the guarantor informed of any material adverse changes in the financial position of the borrower, to whom he/she stands as a guarantor.

    In case the guarantor refuses to comply with demand made despite having sufficient means to make payment such guarantor will also be treated as a willful defaulter.

    1. MHFSL shall refrain from interference in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless information, not earlier disclosed by the borrower, has been n noticed).
    2. In case of receipt of request from the borrower for transfer of borrowal account, the consent or otherwise i.e objection of the MHFSL, if any, shall 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.
    3. Whenever loans are given, MHFSL shall explain to the customer the repayment process by way of amount, tenure and periodicity of repayment. However, if the customer does not adhere to repayment schedule, a defined process in accordance with the laws of the land shall be followed for recovery of dues. The process will involve reminding the customer by sending him/her notice or by making personal visits and/or repossession of security if any.
    4. In the matter of recovery of loans, MHFSL shall not resort to harassment viz persistently bothering the borrowers at odd hours, use muscle power for recovery of loans, etc. As complaints from customers also include rude behavior from the staff of the companies, MHFSL shall ensure that the staff is adequately trained to deal with the customers in an appropriate manner.
    5. The National Housing Bank/Reserve Bank of India has formulated the guidelines (as per Annex XI) for engaging Recovery Agents, for adoption by the MHFSL with the approval of the Board.
    6. MHFSL shall not charge pre-payment levy or penalty on pre-closure of housing loans under the following situations:-
      1. Where the housing loan is on floating interest rate basis and pre-closed from any source
      2. Where the housing loan is on fixed interest rate basis and the loan is pre-closed by the borrower out of their own sources.

        The expression “own sources” for the purpose means any source other than by borrowing from a bank/HFC/NBFC and/or a financial institution

        All dual/special rate (combination of fixed and floating) housing loans will attract the pre-closure norms applicable to fixed/floating rate depending on whether at the time of pre-closure the loan is on fixed or floating rate. In case of a dual/special rate housing loans, the pre-closure norm for floating rate will apply once the loan has been converted into floating rate loan, after the expiry of the fixed interest rate period. This applies to all such dual/special rate housing loans being foreclosed hereafter. It is also clarified that a fixed rate loan is one where the rate is fixed for entire duration of the loan.

    7. MHFSL shall not impose foreclosure charges/pre-payment penalties on any floating rate term loan sanctioned for purposes other than business to individual borrowers, with or without co-obligant (s).
    8. To facilitate quick and good understanding of the major terms and conditions of housing loan agreed upon between MHFSL and the individual borrower, MHFSL shall obtain a document containing the most important terms and conditions (MITC) of such loan in all cases in the prescribed format. The document will be in addition to the existing loan and security documents being obtained by the MHFSL. MHFSL is advised to prepare the said document in duplicate and in the language understandable by the borrower. Duplicate copy duly executed between the MHFSL and the borrower should be handed over to the borrower under acknowledgement.
    9. Display of various key aspect such as service charges, interest rates, penal interest (if any), services offered, product information, time norms or various transactions and grievance redressal mechanism, etc is required to promote transparency in the operations of MHFSL. MHFSL shall follow the instructions on “Notice Board”,” Booklets/Brochures”, “Website”, “Other Modes of Display” and on “Other Issues” as per Annex XII.
    10. MHFSL shall display about their products and services in any one or more of the following languages: Hindi, English or the appropriate local language.
    11. MHFSL shall not discriminate on grounds of sex, caste and religion in the matter of lending. Further, MHFSL shall not discriminate visually impaired or physically challenged applicants on the ground of disability in extending products, services, facilities, etc. However, this does not preclude MHFSL from instituting or participating in schemes framed for different sections of the society.
    12. To publicise the Code, MHFSL shall:
      1. Provide existing and new customers with a copy of the Code;
      2. Make this Code available on request either over the counter or by the electronic communication or mail;
      3. Make available this Code at every branch and on their website; and
      4. Ensure that their staff are trained to provide relevant information about the Code and to put the Code into practice.
    1. The Board of Directors of MHFSL will lay down the appropriate grievance redressal mechanism within the organisation to resolve complaints and grievances. Such mechanism should ensure that all disputes arising out of the decisions of MHFSL and its functionaries are heard and disposed of at least at the next higher level.
    2. The Board of Directors of MHFSL should provide for periodic review of the compliance of Fair Practices code and the functioning of grievance redressal mechanism at various levels of management. A consolidated report of such reviews may be submitted to the Board at regular intervals as may be prescribed by it.

    Fair Practices Code which shall preferably be in the vernacular language or a language as understood by the borrower based on the directions/guidelines of RBI/NHB shall be put in place by MHFSL with the approval of the Board. MHFSL will have freedom of drafting the fair practices code, enhancing the scope of directions but in no way sacrificing the spirit underlying the guidelines/directions of RBI/NHB. The same shall be put up on the website of MHFSL for information of various stakeholders.

    The Board of Directors of MHFSL shall adopt an interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans. The rate of interest and the approach for gradation 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/loan offer letter. The Board of MHFSL shall also have clearly laid down policy for penal interest/overdue interest/charges if any.

    The rate of interest and approach for gradation of risks and penal interest if any shall also be made available on the website of the company or published in the relevant newspapers. The information published in the website or otherwise published in newspapers shall be updated whenever there is a change in the rate of interest.

    The rate of interest and penal interest if any must be annualised rate so that the borrower is aware of the exact rates that would be charged to the account.

    Instalments collected from borrowers should clearly indicate the bifurcation between interest and principal.

    Though interest rates are not regulated by the RBI, rates of interest beyond a certain level may seem to be excessive and can neither be sustainable nor be conforming to the normal financial practice.

    MHFSL shall lay down appropriate internal principles and procedures in determining interest rates and processing and other charges including penal interest if any. In this regard, the direction in the Fair Practice Code about transparency in respect of terms and conditions of the loans are to be kept in view. MHFSL will also put in place an internal mechanism to monitor the process and the operations so as to ensure adequate transparency in communications with the borrowers.

    Annual percentage Rate (APR) on an average works out to 9.25 to 10.75 on Housing Loans

    PLR :–
    Housing Loans – 15.25%
    Mortgage Loans – 18.50%