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Prochesta Thrift & Credit Co-operative Society Asom Ltd. (PROCHESTA)

 

Prochesta Thrift & Credit Co-operative Society Asom Ltd. (PROCHESTA) has been extending Microfinance and engaged in financing welfare oriented schemes. It has also engaged in collection of thrift from its members. The organization works only through women SHGs. The organization is governed by balanced team of learned, experienced practitioners and professionals. Following are the Code of Fair Practices adopted by the Board.

 

CORE VALUES:

 

The Core Values which guide Prochesta Thrift and Credit Cooperative Society Asom Ltd. (PROCHESTA) are as follows:

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A.   INTEGRITY:

To provide low-income clients (women and men and their families) with access to financial services that are client focused, designed to enhance their well-being, and delivered in a manner that is ethical, dignified, transparent equitable and cost effective.

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B.   QUALITY OF SERVICE:

• To ensure quality services to clients, appropriate to their needs, and delivered efficiently in a convenient and timely manner.

• To maintain high standards of professionalism based on honesty, non-discrimination and customer centricity.

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C.   TRANSPARENCY:

• To provide complete and accurate information to clients regarding all products and services offered.

• To create awareness and enable clients and all other stakeholders to understand the information provided with respect to financial services offered and availed.

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D.   FAIR PRACTICES:

• To ensure that clients are protected against fraud and misrepresentation, deception or unethical practices.

• To ensure that all practices related to lending and recovery of loans are fair and maintain respect for client’s dignity and with an understanding of client’s vulnerable situation.

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E.   PRIVACY OF CLIENT INFORMATION:

• To safeguard personal information of clients allowing disclosures and exchange of relevant information with authorized personnel only, and with the knowledge and informed consent of clients.

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F.    INTEGRATING SOCIAL VALUES INTO OPERATIONS:

• To ensure high standards of governance and management focused on not only financial performance but also social impact of business.

• To monitor and report social as well as financial data.

• To assess the social performance and social relevance of the institution from time to time.

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G.   FEEDBACK & GRIEVANCE REDRESSAL MECHANISM

• To provide clients formal and informal channels for feedback and suggestions.

• To consistently assess the impact of services in order to enhance competencies and serve clients better.

• To provide a formal and easy to access grievance redress mechanism for clients.

 

CODE OF CONDUCT:

 

1.    INTEGRITY & ETHICAL BEHAVIOR:

• We shall design appropriate policies and operating guidelines to treat clients and employees with fairness and dignity.

• We shall incorporate transparent and professional governance system to ensure that staff and persons acting on their behalf are oriented and trained to put this Code into practice.

• The incentive structure of our staff shall aim at promoting good business and service practices towards our customers.

• We shall educate clients on the Code of Conduct and its implementation.

 

2.   TRANSPARENCY:

• We shall disclose all terms and conditions to the client, in a form and manner that is understandable, for all services offered. Disclosure shall be made prior to disbursement in accordance with the Reserve Bank of India’s (RBI) Fair Practices Code through the ways of Individual Sanction Letter, Loan Card, Loan Schedule and Passbook. Further, disclosure shall be made through Group meetings for securing clients’ informed consent.

• We shall communicate all the terms and conditions for all products/services offered to our clients in Assamese language which is the official language of the state.

• We shall disclose rate of interest, processing, total charges recovered for insurance coverage and risk covered and any other charges to our clients.

• We shall communicate in writing, charges levied for all financial services rendered. Fee on non-credit products/services will be collected only with prior declaration to the client.

• We shall declare all interest and fees payable as an all-inclusive Annual Percentage Rate (APR) and equivalent monthly rate.

• We shall follow RBI’s guidelines with respect to interest charges and security deposit.

• We shall maintained formal records of all transactions in accordance with all regulatory and statutory norms, and borrower’s acknowledgement/ acceptance of terms/ conditions shall form a part of these records.

• Where a loan is not sanctioned against an accepted application, we shall disclose the reasons for rejection.

• We shall place in public domain the assessment reports on code of conduct compliance.

• We shall put our annual reports and annual financial statements in public domain (on our website) immediately after approval of the Board of Directors.

 

3.   CLIENT PROTECTION:

           

A. FAIR PRACTICES:

• We shall ensure that the provision of micro finance services to eligible clients is as per RBI guidelines.

• We shall offer only financial products and services that have been approved by the concerned regulatory authority to our customers.

• We shall obtain copies of relevant documents from clients, as per standard KYC norms. Additional documents sought shall be reasonable and necessary for completing the transaction.

• The decision on loans shall be taken within a reasonable of time. We shall indicate the time limit within which customers can expect a decision on their application and if sanctioned, the time taken for disbursement of loan.

• We should not bundle our products. (Bundle in this context means make purchase of a product or service conditional for provision of another product or service). The only exceptions to bundling shall be made with respect to credit life, life insurance & livestock insurance products, which are typically offered bundled with loans. The term of insurance shall be transparently conveyed to the client and shall comply with RBI & Insurance Regulatory and Development Authority (IRDA) norms. Consent of the client shall be taken in all cases.         

 

 B.  AVOIDING OVER-INDEBTEDNESS:

• We shall conduct proper due diligence as per our internal credit policy to assess the need and repayment capacity of client before making a loan and shall only make loans commensurate with the client’s ability to repay.

• If a client has loans from 2 separate MFIs, then irrespective of the source of the loans, we shall not provide any loan to the client.

• We shall not, under any circumstance, breach the total debt limit for any client, as prescribed by RBI or Central/ State Government.

• After due verification of credit bureau reports we shall ensure that loans given on the basis of Self Help Group of borrowers is restricted to Rs. 50,000 per borrower.

• We shall carry out test checks of efficacy of our processes relating to avoidance of over-indebtedness through additional credit bureau reports on select sample of clients after loan disbursement. The result of this verification shall be reviewed by the Board periodically.

• To reduce the errors in identification of borrowers in credit bureau reports, we shall provide proper information as prescribes by the credit bureau.

 

C.  APPROPRIATE INTERACTION AND COLLECTION PRACTICES:

• We shall have clearly defined guidelines for employee interactions with clients.

• We shall ensure that all Staff and persons acting on behalf of our organizationa)   a) Use courteous language, maintain decorum, and are respectful of cultural           sensitivities during all interaction with clients.

        b) Do not indulge in any behavior that in any manner would suggest any kind                 of threat or violence.

    c) Do not contact clients at odd hours, as per the RBI guidelines for loan recovery          agents.

      d)   Do not visit clients at inappropriate occasions such as bereavement etc., to           collect dues even if two or more successive repayments are not received.

• We shall provide a valid receipt for each and every payment received from the borrower and record the payment in the passbook/loan card with the client.

• We shall have a detailed Board approved process for dealing with clients, at each stage of default.

• We shall not collect shortfalls in collections from employees and our HR policies shall categorically denounce this practice. However in proved cases of frauds by employees we shall recover the money from employees.

 

D.  PRIVACY OF CLIENT INFORMATION:

  1.   We shall keep personal client information strictly confidential. Client information shall be disclosed to a third party subject to the following conditions:

         a)   Client has been informed about such disclosure and prior permission has                  been obtained in writing.

       b)   The party in question has been authorized by the client with intimation to us                to obtain client information from us.

        c)   It is legally required to do so.

       d)   This practice is customary amongst financial institutions and available for a               close group on reciprocal basis (such as a credit bureau) provided that the         i) clients’ prior consent has been obtained and ii) the receiver of such                       information is also bound by these conditions to keep the client information                 confidential.

 

4.    GOVERNANCE:

   We shall incorporate a formal governance system that is transparent and professional, and adopt the following best practices of corporate governance:

• We shall observe high standards of governance by inducting persons with good and sound reputation as members of Board of Directors and seek to comply with the best standards stipulated in RBI regulations and  the Stock Exchange regulations for listed companies (Even though the MFIs may not be companies or listed in a stock exchange).

• We shall endeavor to have independent directors to the extent of 1/3rd of the Governing Board.

• We shall have a Board approved debt restructuring product/program for providing relief to borrowers facing repayment stress.

• We shall appoint an audit committee of the Board with an independent director as Chairperson.

• We shall ensure transparency in the maintenance of books of accounts and reporting/ presentation and disclosure of financial statements by qualified auditor/s.

• We shall place before the board of Directors, a compliance report indicating the extent of compliance with this Code of Conduct and the functioning of the grievance redressal mechanism at various level of management, specially indicating any deviations and reasons therefore, at regular intervals, as prescribed by the Board.

 

5.   RECRUITMENT:

• As a matter of free and fair recruitment practice, we shall have no restriction on hiring of staff from other MFIs by legitimate means in the public domain like general recruitment advertisements in local newspapers, web advertisements, walk-in-interviews, etc.

• We shall seek a reference check from the previous employer if we recruit from another MFI.

• We shall respond to the reference check request from other MFI within two weeks.

• We shall honor a one month notice period from an outgoing employee.

• We shall not recruit an employee of another MFI, irrespective of the grade/level of the employee, without the relieving letter from the previous MFI employer. An exception shall however be made in instances where the previous employer (MFI) fails to respond to the reference check request within 20 days.

• If we recruit from another MFI, at a level up to the Branch Manager position, the said employee shall not be assigned to the same block where he/she was serving at the previous employer, for a period of 1 year.

 

6.   CLIENT EDUCATION:

• We shall have a dedicated process to raise clients’ awareness of the options, choices and responsibilities vis-à-vis financial products and services available.

• We shall inform the new clients about the organization’s policies and procedures to help them understand their rights as borrowers.

• We shall regular check on client awareness and understanding of the key terms and conditions of the products/ services offered/ availed. Customers feedback shall be gathered, as part of internal audit systems or through some other regular monitoring such as a system of calls to random sample of customers. The feedback from such monitoring shall be reported to the Board periodically.

 

7.   DATA SHARING:

• We shall share complete client data with all RBI approved Credit Bureaus, as per the frequency of data submission prescribed by the SRO.

• We shall provide the data and information called for by all supervisory and regulatory bodies including the SRO.

 

8.   FEEDBACK/ GRIEVANCE REDRESSAL MECHANISM:

• We shall establish dedicated feedback and grievance redressed mechanisms to correct any error and handle/ receive complaints speedily and efficiently.

• We shall inform clients about the existence and purpose of these mechanisms and how to access them.

• We shall designate at least one grievance redressed official to handle complaints and/ or note any suggestions from the clients and make his/ her contact numbers easily accessible to clients.

• We shall display contact number and address of SRO (as applicable) nodal official and details of the grievance redressal system of the SRO.

• We shall have an appropriate mechanism for ensuring compliance with the Code of Conduct.

• We shall prepare a monthly report on grievances received, resolved and pending for a senior management review and periodic reports to the board.