Fair Practice Code

Organization: Lendright Micro Association
Approved by: Board of Directors
Original Date of Issue & Approval: 1st December 2025
Effective Date: 1st December 2025
Date of Last Review & Approval: 1st December 2025
Periodicity of Review: Annual
Policy Owner: Compliance Department
Version: 1/2025

1. Background and Purpose

Lendright Micro Association (“Lendright” or “Lender” or “Company”) is a registered Section 8 company committed to providing paperless, instant unsecured short-term loans to underprivileged households. This Fair Practice Code (FPC) sets out our commitment to transparent, ethical, and fair lending practices in alignment with applicable RBI directions.

2. Applicability

This FPC applies to all employees, agents, field staff, and representatives involved in lending activities across all digital and communication channels.

3. Objectives

• Promote good and fair practices while conducting business
• Act fairly and reasonably in all customer dealings
• Ensure transparency of products, processes, and financial implications
• Promote fair and cordial customer relationships
• Ensure lawful recovery and enforcement practices
• Comply with RBI regulations and fair practice norms
• Ensure timely grievance redressal
• Maintain transparency and accountability

4. Loan Application and Processing

4.1 Communication in Vernacular Language

All borrower communications including loan applications and agreements shall be provided in English, Hindi, or any language understood by the borrower.

4.2 Loan Application

• Loan applications shall include detailed terms and conditions
• Standard documents required shall be clearly listed
• Additional documents may be sought as per underwriting norms
• Borrowers shall be enabled to make informed decisions
• Turnaround Time (TAT) for appraisal shall be disclosed

5. Loan Appraisal, Sanction, and Terms

5.1 Sanction Letter and Communication

Loan sanction details including interest rates, repayment terms, and conditions shall be communicated in writing and acknowledged by the borrower.

5.2 Clear Communication of Loan Terms

• All loan terms shall be communicated clearly
• Penal charges shall be disclosed in the loan agreement / KFS
• Borrowers shall receive a copy of the loan agreement and KFS

5.3 Responsible Lending Practices

• Borrower repayment capacity shall be assessed responsibly
• No discrimination in lending decisions
• Respectful and courteous communication at all times

6. Interest Rate and Charges

6.1 Interest Rate Model

Interest rates shall be determined based on Board-approved policies considering cost of funds, margin, and risk premium.

6.2 Disclosure of Interest Rates

Rates and charges shall be disclosed in applications, sanction letters, KFS, and on the company website.

6.3 Foreclosure Charges

Foreclosure or prepayment charges shall be applied only as disclosed in the KFS.

7. Disbursement and Changes in Terms

• Disbursement shall be done promptly to borrower bank accounts
• Changes in terms shall be prospective and communicated in writing
• Loan transfers shall be processed transparently
• Securities shall be released upon repayment of dues

8. Repossession Clause (If Applicable)

Repossession clauses shall be clearly defined, legally enforceable, and transparently communicated to borrowers.

9. Confidentiality and Privacy

Borrower information shall be treated as confidential and disclosed only as required by law or with borrower consent.

10. Recovery and Collection Practices

• No coercive or abusive recovery practices
• Courteous communication at all times
• Only trained employees shall conduct recovery
• Internal audits shall ensure compliance

11. Grievance Redressal

Borrowers may lodge complaints via phone, email, online portal, or in person. Grievances shall be acknowledged within 48 hours and resolved within 30 days.

12. Board Responsibility and Oversight

The Board of Directors shall oversee compliance with this Fair Practice Code and grievance redressal mechanisms.

13. KYC Compliance and Due Diligence

The company shall comply fully with RBI KYC guidelines and conduct due diligence before sanction and disbursement.

14. Training and Capacity Building

Staff shall be trained in fair lending, ethical behavior, and customer service.

15. Display and Disclosure

This Fair Practice Code shall be displayed prominently at offices and on the company website.

16. Prohibition on Unfair Practices

The company shall refrain from coercive, discriminatory, or unethical practices.

17. NACH Cancellation

Borrowers may request mandate cancellation as per NPCI guidelines through designated communication channels.

18. Review and Amendments

This policy shall be reviewed annually and amendments communicated transparently.

19. Effectiveness and Compliance

This Fair Practice Code is effective from 1st December 2025 and is binding on all employees and representatives of Lendright Micro Association.