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Code of Conduct


GSMS Code of Conduct

                                         CODE FOR RESPONSIBLE LENDING AS DEVELOPED BY Sa-Dhan & MFIN

 

Fair Interaction

 

Provider must ensure that customer is not unfairly discriminated against on grounds such as religion, caste, marital status and sexual orientation. 

Provider must ensure that all employees and persons acting on its behalf. 

  • Use respectful language, maintain decorum and are respectful of social and cultural sensitives 
  • Do not use coercion of any sort to make recovery of loans 
  • Do not intimidate or humiliate verbally or physically 
  • Do not contact customers at odd hours or at inappropriate times such as bereavements, illness, social occasions such as marriages and births 

Suitability (avoiding multiple/over lending) 

  • Provider must assess customer’s financial situation (income and expenses), credit requirement, repayment capacity and indebtedness based on information from the customer, Credit Information Report (CIR) and/or field level intelligence before disbursing a loan.

 Provider must use a valid4 CIR before sanctioning any loan. It is clarified that CIR must be used before disbursing all loans including small value top-up loans, second and subsequent cycle loans

 

 Provider must disburse the loan commensurate with the customer’s ability to repay. While disbursing a loan, Provider must ensure that:

 

  1. It does not become the fourth lender to a customer if a customer has active loans from three (3) different Providers (entity agnostic). NBFC-MFIs are additionally required to ensure that not more than 2 NBFC-MFIs lend to a customer5. Provider must verify the lender count (i.e. number of Provider) to the customer using a valid CIR prior to sanction of the loan.

 

  1. It does not breach the total indebtedness of Rs 100,000 per customer. Provider must verify the total indebtedness to customer factoring un-secured microfinance loans (individual as well as group) captured in the microfinance section of the Credit Information Report (prior to sanctioning of the loan)6.

 

  1. It does not sanction/disburse a loan to customer who has non-performing (delinquency > dpd 90 days7) accounts with loan amount outstanding > Rs 1,000 with another Provider8.

 

Education & Transparency 

  • Provider must provide the key information to the customer and include them in the loan documents such as loan application, loan sanction letter/loan agreement and loan card. This must include:

 Identity and address of Provider

  1. Identify and address of the customer
  2. Product details (loan amount, tenure, repayment frequency, annualised interest rate on reducing balance method9, processing fee, any other charges or fees howsoever described, total amount payable, total charges recovered towards premium of credit-linked life insurance cover, coverage amount and risks covered, if applicable and other key terms and conditions)
  3. Details of customer grievance redressal system 
  • Providers must communicate all the terms and conditions to customers in the official regional language or a language understood by them. 
  • Providers must provide a receipt for every payment received from the customer.

 Providers must take measures (such as training, assessment and periodic interactions with customers) to ensure that customers fully understand the products, process and terms of the contract.

 Information & Privacy

 Provider must obtain copies of KYC documents from customers as per RBI norms.

  • Providers must upload accurate and comprehensive customer data with all RBI approved Credit Information Companies’ (CICs) as per Uniform Credit Data Format on a weekly basis.
  • Provider must promptly address any dispute raised by the customer about her data with CICs

Provider must keep personal customer information strictly confidential. Customer information may be disclosed to a third-party subject to any of the following conditions:

 Such information is required to be provided under the law or it is provided for a mandated business purpose (for example, to credit information companies)

  1. Customer has been informed about such disclosure and prior permission has been obtained in writing
  2. The party in question has been authorized by the customer with intimation to the Provider to obtain customer information

 Grievance Redressal

 Providers must provide a robust customer grievance redressal system to address customer complaints in an effective and timely manner.

  1. Providers must clearly communicate the details of customer grievance redressal in branches, loan documents and other communication materials

 Governance & Enforcement

 

  • CRL to be signed by the Chief Executive/ relevant Senior Management level of the Provider backed by a Board resolution of the company10.
  • Provider adopting the CRL take the responsibility to align own policies and process to adhere with norms of CRL.
  • Provider adopting the CRL take the responsibility to incorporate professional governance system to ensure that employees and persons acting on their behalf are oriented and trained to follow CRL into practice.
  • Provider adopting the CRL voluntarily agree to governance & enforcement framework to ensure adherence of the CRL.
  • Provider adopting CRL agree to assign a dedicated CRL Coordinator who will be the focal point to coordinate on CRL.
  • MFIN and Sa-Dhan to act as a facilitator for the implementation of CRL and the CRL Steering Committee.
  • Quarterly adherence report on/by Provider based independent data from a Credit Information Company (CIC) in a standard template11

CLIENT AWARENESS

  • CLIENT AWARENESS – through Group Meetings, Clients are made aware of all products/services offered and all terms and conditions are disclosed in a language understood by the clients. Clients consent is also taken before disbursement of any loan. Clients are also informed about the prevailing interest rate charge, processing fee & insurance fee as per RBI guidelines. Clients are also informed about the FPC guidelines of RBI. They are informed that the Company can’t be 3rd lender to a client, if the Client has loans from 2 other lenders. Clients can take help of Company’s Grievance Redressal Mechanism if there is any deficiency of service rendered by SCPL.  
  • WORKSHOP / SEMINAR – Workshops with the Clients are held on a regular basis to receive the feedback and any suggestion given by them. It helps to strengthen the bondage with the clients. 
  • FINANCIAL LITERACY TRAINING – Group Meetings also help in spreading of Financial Literacy. Clients are made aware of KYC procedures. They are taught, if required, vernacular alphabets & numbers, so that they can put their signatures and know how much loan amount she is receiving so that chances of duping are eliminated. Banking habits are also developed as funds are disbursed through the bank only. Clients are also taught about family planning, proper hygiene & need for vaccinating their children.

FAIR PRACTICES CODE (FPC) AS PER RBI GUIDELINES

Grameen Shakti Microfinance Services PVT. LTD. (GSMS) shall adopt the following fair practices in conformity with RBI guidelines laid down in the Master Circular dated July 1, 2015 in this regard.
(i) General
(a) The FPC in both English and vernacular languagewill be displayed by GSMS in its office and branch premises.
(b) A statement will be made in vernacular language and displayed by GSMS in their premises and in loan cards articulating their commitment to transparency and fair lending practices. 
(c) Field staff will be trained to make necessary enquiries with regard to existing debt of the borrowers. 
(d) Trainingoffered to the borrowers shall be free of cost. Field staff will be trained to offer such training and also make the borrowers fully aware of the procedure and systems related to loan / other products. 
(e) The effective rate of interest charged and the grievance redress system set up by GSMS will be prominently displayed in all its offices and in the literature issued by it (in vernacular language) and on its website.
(f) MFIs must declare all interest and fees payable as an all-inclusive Annual Percentage Rate (APR) and equivalent monthly rate.
(g) A declaration that GSMS will be accountable for preventing inappropriate staff behaviour and timely grievance redressal, will be made in the loan agreement and also in the FPC displayed in its office/branch premises. 
(h) The KYC Directions will be complied with. Due diligence shall be carried out to ensure the repayment capacity of the borrowers. 
(i) All sanctions and disbursement of loans will be done only at a central location and more than one individual must be involved in this function. In addition, there will be close supervision of the disbursement function. 
(j) Adequate steps will be taken to ensure that the procedure for application of loan is not cumbersome and loan disbursements are done as per pre-determined time structure.

(ii) Disclosures in loan agreement / loan card 
(a) SCPLwill have a Board approved, standard form of loan agreement. The loan agreement will preferably be in vernacular language. 
(b) In the loan agreement, the following will be disclosed: 
a. All the terms and conditions of the loan, 
b. That the pricing of the loan involves only three components viz. the interest charge, the processing charge and the insurance premium (which includes the administrative charges in respect thereof), 
c. That there will be no penalty charged on delayed payment, 
d. That no security deposit / margin is being collected from the borrower, 
e. That the borrower cannot be a member of more than one SHG / JLG, 
f. The moratorium period between the grant of the loan and the due date of the repayment of the first installment, 
g. An assurance that the privacy of borrower data will be respected.

(c) The loan card will reflect the following details: 
i. The effective rate of interest charged, 
ii. All other terms and conditions attached to the loan, 
iii. Information which adequately identifies the borrower and acknowledgements by GSMS of all repayments including installments received and the final discharge, 
iv. The loan card will prominently mention the grievance redress system set up by the GSMS and also the name and contact number of the nodal officer, 
v. Non-credit products issued will be with full consent of the borrowers and fee structure will be communicated in the loan card itself, 
vi. All entries in the loan card will be in the vernacular language.

(iii) Non-coercive methods of recovery 
(a) Recovery will normally be made only at a central designated place. Field staff will be allowed to make recovery at the place of residence or work of the borrower only if borrower fails to appear at central designated place on two or more successive occasions. 
(b) SPL will ensure that Stems for their recruitment, training and supervision. Training to field staff will include programs to inculcate appropriate behaviour towards borrowers without adopting any abusive or coercive debt collection / recovery practices. 
(c) Penalties may be imposed in cases of non-compliance by field staff with the Code of conduct. Generally, only employees and not out sourced recovery agents will be used for recovery in sensitive areas.

(iv) Customer Protection Initiatives 
(a) GSMS will ensure that greater resources are devoted to professional inputs in the formation of SHG/ JLG and appropriate training and skill development activities for capacity building and empowerment after formation of the groups. GSMS will also be prudent and responsible in their lending activity.
(b) GSMS will conduct proper due diligence as per its internal credit policy to access the need and repayment capacity of client making a loan and only make loans commensurate with client’s ability to repay. 
(c) If a client has two loans from two separate MFIs, then irrespective of the source of the loans, SCPL will not be the third lender to that client. And GSMS will validate the same by Credit Bureau Report prior to extension of loan. 
(d) GSMS must not under any circumstance breach the total limit as prescribed by RBI. This will be validated by Credit Bureau prior to disbursement of loan. 
(e) GSMS after due verification of credit bureau reports will ensure that loans given on the basis of joint liability group of borrowers (JLG Loan) is restricted to Rs. 60,000 per borrower. Where loan to a specific borrower exceeds Rs. 60,000, or the loan takes the total debt of debt of the borrower above Rs 60,000, such a loan should be given as an individual loan without involving the JLG. GSMS will take necessary steps to have appropriate systems and staff with required competencies to deal with individual loans.
(f) GSMS should carry out test checks of efficacy of their processes related to avoidance of over-indebtedness through additional credit bureau reports on select sample of credits after loan disbursement. The result of this verification will be reviewed by board of GSMS. 
(g) GSMS will use UIDAI number (Aadhaar number) based KYC to reduce errors in identification of borrowers in credit bureau reports.
(h) GSMS will ensure that all the staff and persons acting on behalf of the GSMS:
- Use courteous language, maintain decorum, and are respectful of cultural sensitivities during all interactions with clients.
- DO NOT indulge in any behavior that in any manner would suggest any kind of threat or violence.
- DO NOT contact clients at odd hours.
- DO NOT visit clients at inappropriate occasions such as bereavement, etc., to collect dues even if two or more successive repayments are not received. 
(i) GSMS must provide a valid receipt (in whatever form decided) for each and every payment received from the borrower and record the payment in the loan passbook/ loan card with the client. 
(j) GSMS will have detailed board approved process for dealing with clients, at each stage of default. 
(k) GSMS must keep personal client information strictly confidential. Client information may be disclosed to third parties subject to following conditions:
- Client has been informed about such disclosure and prior permission has been obtained in writing.
- The party in question has been authorized by the party with intimation to GSMS to obtain client information.
- It is legally required to do so.
- This practice is customary amongst financial institutions and available for a close group on reciprocal basis (such as Credit Bureau) provided that the 1. Clients’ prior consent has been obtained and 2. The receiver of the information is also bound by the conditions to keep the client information confidential. 
(v) Governance 
GSMS must incorporate a formal governance system that is transparent and professional, and adopts the following best practices of corporate governance:
a) GSMS must observe high standards of governance by inducting persons with good and sound reputation as Board of Directors / Governing body and seek to comply with best standards stipulated in Companies Act and RBI regulations for NBFC MFI. 
b) GSMS will endeavor to have independent directors to the extent of 1/3rd of the Governing Board.
c) GSMS must have a Board approved debt restructuring product/program for providing relief to borrowers facing repayment stress. 
d) GSMS will appoint an audit committee on Board with an independent director as chairperson. 
e) GSMS will ensure transparency in the maintenance of books of accounts and reporting/ presentation and disclosure of financial statements by qualified auditor/s. 
f) GSMS must put best effort to follow the Audit and Assurance Standards issued by the Institute of Chartered Accountants of India (ICAI).
g) GSMS must 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, specifically indicating any deviations and reasons therefore, at regular intervals, as may be prescribed by Board. 
(vi) Recruitment / HR
a) As a matter of free and fair recruitment practice, there will be no restriction on hiring of staff from other MFIs by legitimate means in the public domain like general recruitment advertisement in local newspapers, web advertisements, walk-in interviews, etc.
b) Whenever GSMS will seek to recruit an employee in another MFI, it will be mandatory to seek a reference check from current employer. The reference check will be sought from current employer only after an offer is made and an offer letter is issued to the prospective employee. 
c) GSMS will respond to the reference check requests from another MFI within two weeks.
d) GSMS will honour notice period as contractually agreed between employer and employee subject to a minimum of one month for an outgoing employee.
e) GSMS 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 can however be made in instances where the previous employer (MFI) fails to respond to the reference check request within 20 days. GSMS must provide such relieving letter to the outgoing employee in case he/she has given proper notice, handed over the charge and settled all the dues towards the MFI, except in proven cases of fraud or gross misconduct by the employee.
f) Whenever GSMS will recruits 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.
g) GSMS must not collect shortfalls in collection from employees and HR policies must categorically denounce this practice. However, in proven cases of fraud by employees, GSMS may be allowed to recover the money from said employee(s).

Further GSMS shall adhere to core values and code of conductset up by Self-Regulatory Organization for NBFC MFIregulated by RBI. These core values are:
A) Integrity:
To provide low income clients – women and men, and their families, with access to financial services that are clients focused, designed to enhance their well-being, and delivered in a manner that is ethical, dignified, transparent, equitable, and cost effective. 
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 custom centricity. 
C) Transparency:
- To provide complete and accurate information to clients regarding all products and services offered.
- To create awareness and unable clients and all other stakeholders to understand the information provided with respect to financial services offered and availed. 
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. 
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. 
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 the social relevance of the institution from time to time. 
G) Feedback and 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 grievances redress mechanism for clients.

Feedback / Grievance Redressal Mechanism :

Communication of Grievance Redressal Mechanism to Clients

Clients are informed about their rights to file complaint or raise any grievance related to GSMS.

Process for Clients Recording Complaints

  • Clients are provided with the telephone number of the Field Staff, Branch Manager and of the Head Office
  • Head Office have a grievance redressal number (92300-72300) which is provided to the clients. Each Branch & HO  maintain a dedicated Complaint register to record complaints
  • Over the phone:
  • Complaint during center meeting or walk-in to branch:
  • Drop-box: Each branch have a drop box and clients can choose to drop their queries, suggestions or complaints in the drop box. Drop-box complaints are recorded in Branch’s complaint register by Area Manager. The original letter dropped by the client in the box is retained and filed in a separate file. The log is sent to head office within 7 days from registering it.

Complaint Resolution Mechanism

GSMS have a designated GRO (GM, Compliance), who is ultimately responsible to ensure that client grievances are satisfactorily addressed. GRO will analyze grievance data and provide periodic reports on grievances to the Senior Management and to the Board

Data Sharing :

All data and information related to credit is shared by GSMS with RBI approved Credit Bureau Organisations from time to time for both gathering and sharing member database.

Privacy of Client information :

  • Data and information collected from clients are treated as confidential and are not shared with anyone or any agency except in the following circumstances
  • Written approval is taken from a client to share the data;
  • If it is legally necessary for GSMS to share such data and information;
  • Information can be divulged to individual or institution who have been authorized by the client to gather such data;
  • In the event of sharing information with Credit Bureau and if there is an existing practice among financial institutions to exchange information and data about any client from their respective database.

Appropriate interaction and collection practices :

  • To build up a trustworthy and long lasting relationship with the clients GSMS emphasizes on  proper conduct of the employees in dealing with the clients and explanation of all issues to them in easy-to-understand vernacular language.
  • It is necessary for GSMS employees to interact with client and their family members in a manner that does not hurt their religious sentiments or dignity.
  • It is essential to maintain ethical behavior and to follow regulations of the organization while conducting field operations.
  • No coercive steps like using abusive language, insulting behavior or terrorizing should be adopted at the time of loan installment collections.
  • Employees of GSMS will not contact clients at odd hours and also will not visit them at inappropriate occasions such as bereavement, sickness  etc.
  • GSMS will always acknowledge each and every installment repayment   received   from   its   clients   with   due  authentication of  the entries in the passbook  by the collector.
  • GSMS employees will  always abstain from behaving in a manner that gives rise to unpleasant situations in working areas.
  • Loan passbooks are required to be updated with records of latest installment collections by the field officer.
  • Every loan application is co-signed by a person or group of persons who undertake to ensure that repayment of loan installments continues smoothly. GSMS ensures thatall such persons are made aware about their responsibilities for having given the undertaking.
  • No employee of GSMS will visit houses of its clients during nights for repayment collections.
  • Phone +91-7044 044 045 +91-7044 044 022
  • E-mail hrmanager@grameenshakti.co.in
  • Address 13/2, Ashutosh Chatterjee Road, Kolkata-700031

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