Customer Engagement Policy
(Version 2.1)
PUBLIC Document ID: NOCPL_PO_06
Introduction
1.1 New Opportunity Consultancy Pvt. Ltd. (NOCPL), a company registered under the Companies Act, is an authorized Business Correspondent (BC) to multiple Banks/NBFCs in India. The Company, on behalf of these Banks/NBFCs, provides micro loans under SHG/JLG model, credit linked insurance, savings account, etc. at the doorstep of its customers. The purpose of appointment of BC is to enhance the reach of a Bank/ NBFC to help in their overall Financial Inclusion Plan. BCs are the extended arms of the Bank/NBFC to reach areas where they are not able to provide services directly in normal course of business.
1.2 The Microfinance Industry has evolved over the years to play an enhanced role in the financial inclusion efforts. Consequently, the need for a consensus-based industry framework to ensure standardization and compliance in an uniform manner across all microfinance institutions is a natural corollary. One of the outcomes has been the formulation of a common Industry Code of Conduct.
1.3 NOCPL is a member of Microfinance Institutions Network (MFIN), which is a representative body as also the Self-Regulatory Organization (SRO) for Non-Banking Finance Companies - Microfinance Institutions (NBFC-MFIs) regulated by the Reserve Bank of India. As a member of MFIN, NOCPL and its employees shall strictly follow the Code of Conduct adopted by MFIN towards conducting every stage of microfinance business (including recovery of dues from its customers) on behalf of the Banks and NBFCs.
2. Customer Engagement Process
2.1 Identification of Target Customers
The primary objective of micro finance is to reach economically challenged people, predominantly women, for delivering financial products and services. To ensure that the right customers are targeted, the Company emphasizes on door-to-door sourcing, Customer Point Verification (CPV) including personal discussion with loan applicants and checking credit bureau information to weed out over-leveraged and defaulted customers.
2.2 Multi-Step Customer Verification
In order to ensure the quality of sourcing by eliminating, inter alia, the possibility of coerced borrowing practices prevalent in microfinance industry -
- The Company has established separate channels for customer relationship (acquisition & maintenance by a Relationship Officer) and customer evaluation (credit risk mitigation by a Credit Officer).
- Compulsory Group Training (CGT) is conducted by Relationship Officer for all customers to ensure that they have full understanding of the joint liability, loan product, interest rate, repayment schedule and other terms & conditions. The Company’s customer grievance resolution process and a bit of financial literacy are also imparted.
- Group Recognition Test is taken by the Company’s Branch Manager and/or Principal Bank’s Product Sales Manager to revalidate the quality of CGT, customer’s credentials and loan purpose.
2.3 Centre Meetings & Collection
Collecting monthly installments on due dates and depositing with the designated account of the Principal Bank/NBFC is one of the most critical activities of the BC. To ensure smooth collection of monthly repayments (EMIs), the Company follows a business model wherein the Relationship Officer (RO) in a branch conducts maximum 12 scheduled (recovery) meetings per day with 12 collection days in a month, which makes the collection meetings predictable – both for the RO and the customers.
3. Code of Conduct for Customer Engagement
3.1 During Sourcing & Customer Verification
- Professional Conduct: Employees of the Company shall always remain professional during conversations and visits, use respectful language and maintain decorum. They shall always identify themselves as also the Company at the beginning of every conversation with customers.
- No discrimination: Customers shall not be discriminated on grounds of religion, caste, marital status or sexual orientation.
- Direct contact with the customers: Shall be established to avoid unscrupulous intermediaries or ring leaders.
- Know Your Customer (KYC): Shall obtain valid KYC documents (as per requirement of Principal/ Reserve Bank of India - RBI) before processing loan request.
- Credit Assessment and Avoidance of Over-Indebtedness: The Company shall take reasonable steps to ensure that credit will be extended only if the borrowers have demonstrated adequate ability to repay and such loans will not put the borrowers at significant risk of over-indebtedness. For this purpose, relevant guidelines provided by the Principal/ RBI shall be followed.
Similarly, adequate care shall be taken to ensure that non-credit financial products (such as insurance) extended to low-income customers are appropriate and all necessary details are disclosed. - Valid Credit Information Reports: Shall be checked in association with the Principal, before sanction of loan to confirm existing indebtedness of the applicant customer’s household and their ‘no default’ status.
- Training, Education and interaction: Shall be imparted to ensure that the customer fully understands the product, process and terms of contract. Information shall also be provided on importance of timely repayment for good credit history (with credit bureau agency) as well as benefit, risks and necessary safeguards of digital financial transactions and grievance redressal mechanism.
- Transparent Terms: Pricing, terms & conditions of financial products (including interest charges, insurance premium, all fees, etc.) shall be transparent and adequately disclosed in a manner/ language understandable to the customer. The Sanction letter & Loan Agreement shall contain key information of customers and relevant details of the loan.
- Bundling of Third Party Products: Customers shall not be forced to buy any third-party financial/ other products as pre-condition to access micro-credit (Life insurance product linked to the credit is not considered as a third-party product).
3.2 During Collections (SHG/JLG meetings) – Guidelines to deal with delinquent customers
It is the endeavour of the Company that its customers are treated with respect, dignity, courtesy and fairness in debt collection practices, which shall not be abusive or coercive.
Therefore, it is important that all employees involved in collection-related activities shall follow the adopted Code of Conduct, viz :
- Employees shall use only respectful language, even if the other party does not
- Shall maintain decorum, and are respectful of social and cultural sensitivities
- No written or verbal threats, abuse or harshness shall be permitted
- If the customer declines to pay, the consequence, viz. impact on her credit history, which will have a bearing on obtaining further credit from the Company as also other borrowers, shall be explained
- When a customer turns abusive or threatening, the employee shall terminate the discussion (all discussions where the customer becomes abusive or threatening, will be properly documented)
- The customer’s debt/ obligation shall normally be discussed only with her
- The customer shall ordinarily be contacted at Centre meeting place. However, should the customer provide a business address also, then attempts to contact her may be made there, only if accompanied by other member/s from the Group
- The customers shall be called only between 9.00 AM to 6.00 PM.
- Communication with the customers shall be in a language understood by her.
DO NOTs
- Threaten legal action and/or possession of customer assets when no such action is contemplated
- Threaten with violence and/or imprisonment or even mention about imprisonment
- Humiliate the customers verbally or physically
- Harass relatives/ friends or co-workers of the customers
- Mislead the customers about the extent of her debt and/or collect sums in excess of total dues of the customer
- Enter the customer’s residence against her wishes
- Restrict the customer’s movement or restrain her from entering or leaving the house/room
- Visit the customer’s house in large numbers, and/or if she has suffered a bereavement or a family member is gravely ill, and/or a social engagement is in progress, and/or if the customer is not present and only minors/elderly/infirm are present at the time of the visit
- Remain in the customer’s house, if she were to leave for any reason including to collect money from a bank/ elsewhere
- Publish the name of delinquent borrowers
- Accept bribes or gifts of any kind from the customers.
3.3 General Guidelines
- Valid Receipt/Acknowledgement: Shall be issued for each and every payment, including for digital payments, received from the customers.
- Ethical Staff Behaviour: Company officials shall comply with high ethical standard in their interaction with micro finance customers and the Company shall ensure that adequate safeguards are in place to detect and remove corruption/ fraud or mistreatment of customers.
- Privacy of Customer Data: Privacy of individual customer data shall be respected and such data shall not be used for other purposes without the express permission of the customers (while recognizing that the Company shall play an important role in helping customers achieve the benefits of establishing their credit histories).
- Mechanism for Redressal of Grievances: The Company shall have in place a suitable Customer Grievance Redressal system to address customer complaints in an effective and timely manner.
- Fair Practices Code approved by the Company’s Board shall be displayed in a language understood by the borrower in all its branches.
4. Conclusion
4.1 The Company is committed to observe fair practices in all its business transactions and dealings with customers with utmost transparency and ethical standard. Strict compliance to the aforesaid Code of Conduct and guidelines shall go a long way to ensure such commitment.
4.2 A copy of this Policy duly approved by the Company’s Board shall be hosted on its website.
(Ver.2.1_July’22)