Responsible Lending

All parts of this Code apply to all the products and services, whether they are provided by the Company or subsidiaries across the counter, over the phone, by post, through interactive electronic devices, on the internet or by any other method.

1. Meeting the commitments and standards in this Code, for the products and services we offer, and in the procedures and practices our staff follows;

2. Making sure that our products and services meet relevant laws and regulations in letter and spirit;

3. Ensuring that our dealings with borrowers rest on ethical principles of integrity and transparency;

1. We shall ensure that all advertising and promotional material is clear, and not misleading.

2. In any advertising in any media and promotional literature that draws attention to a service or product and includes a reference to an interest rate, we shall also indicate whether other fees and charges, if any, will apply and that full details of the relevant terms and conditions are available on request.

3. We shall provide information on interest rates, common fees and charges through putting up notices in our branches; through telephone or help-lines; on our website; through designated staff/ help desk; or providing service guide / tariff schedule.

4. If we avail of the services of third parties for providing support services, we shall require that such third parties handle borrower’s personal information (if any available to such third parties) with the same degree of confidentiality and security as WE would.

5. We may, from time to time, communicate to borrowers various features of our products availed by them. Information about our other products or promotional offers in respect of products /services, may be conveyed to borrowers only if he / she has given his / her consent to receive such information / service either by mail or by registering for the same on the website or on borrower service number.

6. Prescribe a code of conduct for the Direct Selling Agencies (DSAs) / Consultants / Direct Selling Teams (DST’s) / Telecallers whose services are availed to market products / services which amongst other matters require them to identify themselves when they approach the borrower for selling products personally or through phone.

7. In the event of receipt of any complaint from the borrower that our representative or DSA has engaged in any improper conduct or acted in violation of this Code, appropriate steps shall be initiated to investigate and to handle the complaint.

1. Applications for loans & their processing –(a) At the time of sourcing a Loan Product, we will provide Information about the interest rates applicable, as also the fees/charges, if any, payable for processing, pre-payment options &charges, if any, & any other matter which affects the interest of the borrower, so that a meaningful comparison with those of other lenders can be made & informed decision can betaken by the borrower. The loan application form shall contain the list of documents required to be submitted with the application form.
   The rate of interest applicable to the borrowers shall be based on the number of factors such as profile of the borrower viz. academic background of the student availing the loan, course selected, college in which admission is sought, cost of funds, financial strength of the co-borrower,security/collateral offered etc.
   (b) We shall transparently disclose to the borrower all information about fees / charges payable for processing the loan application, pre-payment options and charges, if any, penalty for delayed repayment if any, or vice versa, existence of any interest re-set clause and any other matter which affects the interest of the borrower. We would also ensure that such charges/fees are non-discriminatory.
   (c) We shall follow the System of giving Acknowledgement for receipt of all Loan Applications.Preferably, the time frame within which Loan Applications will be disposed of should also be indicated in the Acknowledgement, keeping in mind the level of Authority to which the Loan Proposal would be forwarded for final decision.

2. Loan appraisal and terms/conditions–(a) Normally all particulars required for processing the Loan Application shall be collected by us at the time of Application. In case we need any additional information, the Borrower would be told that he would be contacted immediately again.
   (b) We shall convey in writing to the Borrower the Loan Sanctioned along with the Terms &Conditions thereof including annualized rate of interest, method of application, EMI Structure,prepayment charges and shall keep the written acceptance of all these terms and conditions by the borrower in our records.
   (c) We shall supply Authenticated Copies of all the Loan Documents executed by the Borrower along with a copy each of all enclosures quoted in the Loan Document to every borrower subsequent to disbursement of loans.

3. Communication of rejection of Loan Application We shall communicate in writing the reason(s) for rejection of the loan application.(iv) Disbursement of loans including changes in terms and conditions) a Disbursement shall be made in accordance with the disbursement schedule terms or conditions given in the Loan Agreement/ Sanction Letter and opted by the borrower.
   b) We shall give notice to the Borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges, other applicable fee/charges etc. We shall also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard shall be incorporated in the loan agreement.
   c) Before taking a decision to recall / accelerate payment or performance under the Agreement or seeking additional securities, we shall give notice to borrowers in consonance with the Loan Agreement.
   d) We shall release all Securities within 15 working days of repayment of all dues or on realization of the outstanding amount of loan subject to any legitimate right or lien for any other claim that we may have against the borrower. If such right of set off is to be exercised, the borrower shall be given a prior notice about the same with full particulars about the remaining claims &the conditions under which we are entitled to retain the securities till the relevant claim is settled / paid.

When a person intends to be Guarantor for a loan, he / she will be informed about:(a) his/her Liability as Guarantor;
(b) the amount of Liability he/she will be committing himself / herself to the Company;
(c) circumstances in which we will call on him / her to pay up his / her Liability;
(d) whether we have recourse to his/her other monies/securities in the Company if he/ she fails to pay up as a Guarantor;
(e) whether his/her liabilities as a Guarantor are limited to a specific quantum or are they unlimited;
(f) time & circumstances in which his/her liabilities as a Guarantor will be discharged and also the manner in which we will notify him/her about this.We shall keep him / her informed of any material adverse change/s in the financial position of the borrower for whom he / she stands as a Guarantor.

All personal information of borrowers shall be treated as private and confidential [even when the borrowers are no longer customers of AVANSE], and shall be guided by the following principles and policies. We shall not reveal information or data relating to borrower’s account, whether provided by the borrowers or otherwise, to anyone, including other companies / entities in our group, other than in the following exceptional cases:
(a) If the information is to be given by law
(b) If there is a duty towards the public to reveal the information
(c) If our interests require them to give the information (for example, to prevent fraud) but it should not be used as a reason for giving information about borrower or borrower accounts[including borrower name and address] to anyone else, including other companies in the group, for marketing purposes.
(d) If the borrower asks us to reveal the information, or with the borrower’s permission
(e) If we were asked to give a reference about borrowers, we shall obtain his / her written permission before giving it.
(f) The borrower shall be informed the extent of his / her rights under the existing legal framework for accessing the personal records that we hold about him /her.
(g) We shall not use borrower’s personal information for marketing purposes by anyone including us unless the borrower specifically authorizes us to do so.

(a) When a borrower opens an account, we shall inform him / her when we may pass his / her account details to credit reference agencies and the checks we may make with them.(b) We may give information to credit reference agencies about the personal debts the borrower owes them if:

• the borrower has fallen behind with his / her payments;

• the amount owed is not in dispute; and

• the borrower has not made proposals that we are satisfied with, for repaying his / her debt, following our formal demand.

(c) In these cases, we shall intimate the borrower in writing our intention to give information about the debts of the borrower to the credit reference agencies. At the same time, we shall explain to the borrower the role of credit reference agencies and the effect of the information provided by them will have on their ability to get credit.
(d) We may give credit reference agencies such other information about the borrower’s account, if the borrower has given them his / her permission to do so.
(e) A copy of the information given to the credit reference agencies shall be provided by us to a borrower, if so demanded.

1. Whenever loans are given, we shall explain to the borrower the repayment process by way of amount, tenure and periodicity of repayment. However if the borrower does not adhere to the 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 borrower by sending him / her notice or by making personal visits and / or repossession of security if any.

2. Our collection policy will be built on courtesy, fair treatment and persuasion. We believe in fostering borrower confidence and long-term relationship. Our staff or any person authorized to represent us in collection of dues and / or security repossession shall identify himself / herself and display the authority letter issued by us and / or upon request, display his / her identity card issued by us or under the authority of the Company. We will provide borrowers with all the information regarding dues and shall endeavor to give sufficient notice for payment of dues.

3. All the members of the staff or any person authorised to represent us in collection and/or security repossession shall be adequately trained to deal with the borrowers in an appropriate manner and shall follow the guidelines set out below:

1. Borrower would be contacted ordinarily at the place of his / her choice and in the absence of any specified place at the place of his / her residence and if unavailable at his / her residence,at the place of business / occupation.

2. Identity and authority to represent us shall be made known to the borrower at the first instance.

3. Borrower’s privacy would be respected except, as per the terms of the loan agreement (unless the new information, not earlier disclosed by the borrower, has come to the notice of the Company) interference in the affairs of the borrower shall not be done.

4. Interaction with the borrower shall be in a civil manner and muscle power should not be used for the recovery of loans.

5. Our representatives shall contact the borrowers between 0700 hrs and 1900 hrs, unless the special circumstances of the borrower’s business or occupation require otherwise.

6. Borrower’s request to avoid calls at a particular time or at a particular place shall be honored as far as possible.

7. Time and number of calls and contents of conversation would be documented.

8. All assistance shall be given to resolve disputes or differences regarding dues in a mutually acceptable and in an orderly manner.

9. During visits to borrower’s place for dues collection, decency and decorum shall be maintained.

10. Inappropriate occasions such as bereavement in the family or such other calamitous occasions shall be avoided for making calls

Internal Procedures

1. The Company has established the system and procedures for receiving, registering and disposing of complaints and grievances in each of its offices.

2. The Board of Directors of the Company has laid down the appropriate grievance redressal mechanism within the organization to resolve complaints and grievances. Such mechanism ensures that all disputes arising out of the decisions of the functionaries are heard and disposed of at least at the next higher level.

3. Customer shall be told where to find details of the Company’s procedure for handling complaints, fairly and quickly.

4. If the Customer wants to make a complaint, then the Customer would be informed on the following:

1. How to do this

2. Where a complaint can be made

3. How a complaint should be made

4. When to expect a reply

5. Whom to approach for redressal

6. What to do if the Customer is not happy about the outcome.

7. Our staff shall help the Customer with any queries the Customer has.

5. Grievance Redressal Procedure

Great services help companies drive the customer acquisition, retention and efficiency which in turn make the company successful. At Avanse, The core philosophy being Grievance Redressal has always been customer care, and hence we have developed a four tier approach to leave no stone unturned in solving the customer complaints.

The Company has established a four tier grievance resolution process to resolve customer grievances. The Customer can also follow the below four tier resolution process in case of any issue relating to services availed from any business partners of the Company.

• Level 1:

1. In case of any grievance, the Customer may contact the respective Branch Team/s, either telephonically /by email /by visiting Branch office and register their complaint/grievance in the complaint register available in the branch.

2. We shall endeavor to send an acknowledgement to the Customer within two working days of the receipt of complaint/grievance. Further, we shall strive to provide the Customer /s with a suitable response/resolution on his complaint/grievance within 14 working days

3. In case the Customer is not satisfied with the resolution/respond provided by the branch team/s in due course, then he may escalate his compliant in the following manner

• Level 2:

In case the Customer is not satisfied with the resolution/respond provided by the branch team/s in due course, then he/she may contact our Customer Response Team through any of the following channels:

Mail: Avanse Financial Services Ltd,

Kind attention: Ms. Sonia Sule

DHFL House, 1st floor, 19, Sahar Road

Off. Western Express Highway

Vile Parle (East), Mumbai – 400 099

Email: customercell@avanse.com

Telephone:022-71112233

Fax: 022 - 71112234, to the attention of Ms. Sonia Sule

We will strive to solve your complaint/query/grievance at this level.

• Level 3:

In case the Customer is still dissatisfied with the resolution/respond provided by our Customer Response Team, then he/she may further contact our Grievance Redressal Officer through any of the following channels:

Mail: Avanse Financial Services Ltd

Kind attention: Mr. Samir Kumar Mohanty

Grievance Redressal Officer

DHFL House, 1st floor, 19, Sahar Road

Off. Western Express Highway

Vile Parle (East), Mumbai – 400 099

Email: gro@avanse.com

Telephone: 022-7111 2233

Fax: 022 - 71112234, to the attention of Mr. Samir Kumar Mohanty

We will make our best efforts to solve your complaint/query/grievance at this level

• Level 4:

If the compliant/grievance is not redressed within a period of one month or if the Customer is dissatisfied with the response received, the complainant may appeal the Officer– in- Charge of Regional office of DNBS of RBI through any of the following channels

CGM- DNBS Officer-in-Charge
Mumbai Regional Office,

Opposite Mumbai Central Station,
Near Maratha Mandir Cinema, Byculla,
Mumbai 400 008.

Email: bomumbai@rbi.org.in Phone: 022-24931214

We shall give the Borrower information:-

1. That we will verify the details mentioned by him / her in the loan application by contacting him /her at his / her Residence & / or on business telephone numbers & / or physically visiting his / her residence & / or business addresses through staff or through Agencies appointed for this purpose, if deemed necessary by us.

2. That the Borrower shall be informed to co-operate if we need to investigate a transaction on the Borrower’s Account & with the Police / other investigative agencies, if we need to involve them.

3. We shall advise the Borrower that if the Borrower acts fraudulently, he / she will be responsible for all losses on his / her account & that if the Borrower acts without reasonable care & this causes losses, the Borrower may be held responsible for the same.

4. About our products and services in any one or more of the following languages: Hindi, English or the appropriate local language;

5. We shall not discriminate on grounds of sex, caste & religion in the matter of Lending. However,this does not preclude us from instituting or participating in Schemes framed for different Sections of the Society.

6. We shall process requests for transfer of a loan account, either from the borrower or from a bank /financial institution, in the normal course. The receipt of request from the borrower for transfer ofthe loan account, the consent or otherwise i.e. objection of the Company, if any, shall be conveyed within 21 days from the date of receipt of such request. Such transfer shall be as per the transparent contractual terms entered into with the borrower in consonance with law.

7. To publicize the Code we will:-
   1. Provide existing and new borrowers with a copy of the Code, if requested;
   2. Make this Code available on request either over the counter or by electronic communication or mail;
   3. Make available this Code at every branch; and on our website;
   4. Ensure that our staff is trained to provide relevant information about the Code and to put the Code into practice.

8. The Board of Directors shall periodically review the Compliance of the Fair Practice Code and functioning of the grievance redressal mechanism. A consolidated report of such reviews may be submitted to the Board of Directors at regular intervals, or as may be prescribed from time to time.

9. The Code will be reviewed at yearly intervals or as and when felt necessary by the Board.

1. Customer identification means identifying the customer and verifying his/her identity by using reliable, independent source documents, data or information. Avanse shall obtain sufficient information necessary to verify the identity of each new customer along with brief details of its promoters and management, wherever applicable, whether regular or occasional and the purpose of the intended nature of Business relationship. The requirement as mentioned herein may be moderated according to the risk perception like in the case of a public listed company it will not be necessary to identify all the shareholders.

2. Besides risk perception, the nature of information/documents required would also depend on the type of customer (individual, corporate etc). For customers that are natural persons, Avanse shall obtain sufficient identification data to verify the identity of the customer, his address/location, and also his recent photograph. For customers that are legal persons or entities, the Company shall 
   (i) verify the legal status of the legal person/ entity through proper and relevant documents 
   (ii) verify that any person purporting to act on behalf of the legal person/entity is so authorized and identify and verify the identity of that person, 
   (iii) understand the ownership and control structure of the customer and determine who are the natural persons who ultimately control the legal person. Customer identification requirements keeping in view the provisions applicable of Prevention of Money Laundering& its Rules and as per guidance note issued in this respect are indicated in Annexure I. An indicative list of the nature and type of documents/information that may be relied upon for customer identification is given in Annexure II. The Company will frame internal guidelines based on its experience of dealing with such persons/entities, normal prudence and the legal requirements.

3. The Company will formulate and implement a Client Identification Programme to determine the true identity of its clients keeping the above in view. The policy shall also cover the identification procedure to be carried out at different stages, i.e. while establishing a relationship; carrying out a financial transaction or when there is a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data.

Important: Avanse shall periodically update Customer Identification Data after the transaction is
entered. The periodicity of updation of Customer Identification data shall be once in five years in
case of low risk category customers and once in two years in case of high and medium risk
categories .

Ongoing monitoring is an essential element of effective KYC procedures. Monitoring of transactions and its extent will be conducted taking into consideration the risk profile and risk sensitivity of the account. Avanse shall make endeavors to understand the normal and reasonable activity of the customer so that the transactions that fall outside the regular/pattern of activity can be identified, Special attention will be paid to all complex, unusually large transactions and all unusual patterns, which have no apparent economic or visible lawful purpose. Avanse may prescribe threshold limits for a particular category of accounts and pay particular attention to the transactions which exceed these limits. Transactions that involve large amounts of cash inconsistent with the normal and expected activity of the customer should particularly attract the attention of Avanse. Higher risk accounts shall be subjected to intense monitoring.
Avanse shall set key indicators for such accounts basis the background of the customer, country of origin, sources of funds, the type of transactions involved and other risk factors which shall determine the extent of monitoring. Avanse shall carry out the periodic review of risk categorization of transactions/customer’s accounts and the need for applying enhanced due diligence measures at a periodicity of not less than once in six months. Avanse shall explore the possibility of validating the new account opening applications with various watch lists available in public domain, including RBI watch list.

The Management under the supervision of the Board of Directors of the Company shall ensure that an effective KYC programme is put in place by establishing appropriate procedures and ensuring their effective implementation. It will cover proper management oversight, systems and controls, segregation of duties, training and other related matters. Responsibility will be explicitly allocated within the Company for ensuring that the policies and procedures as applicable to Avanse are implemented effectively. The Company shall devise procedures for creating Risk Profiles of their existing and new customers and apply various Anti Money Laundering measures keeping in view the risks involved in a transaction, account or business relationship

Avanse shall have an ongoing employee training programs so that the members of the staff are adequately trained in KYC/ AML/ CFT procedures. Training requirements shall have different focuses for front line staff, compliance staff and officer/ staff dealing with new customers so that all those concerned fully understand the rationale behind the KYC policies and implement them consistently.

The Company’s Internal Audit and Compliance functions will evaluate and ensure adherence to the KYC policies and procedures. As a general rule, the compliance function will provide an independent evaluation of the Company’s own policies and procedures, including legal and regulatory requirements. The Management under the supervision of Board shall ensure that the audit function is staffed adequately with skilled individuals. Internal Auditors will specifically check and verify the application of KYC procedures at the branches and comment on the lapses observed in this regard. The compliance in this regard shall be put up before the Board or any Committee of the Board along with their normal reporting frequency. Further, the Company shall have an adequate screening mechanism in place as an integral part of their recruitment/ hiring process of personnel so as to ensure that person of criminal nature/ background do not get an access, to misuse the financial channel.

1. Maintenance of records of transactions The Company shall maintain proper record of the transactions as required under Section 12 of the Prevention of Money Laundering Act, 2002 (PMLA) read with Rules 3 of the PML Rules as mentioned below:(i) All cash transactions of the value of more than rupees 10 lakhs or its equivalent in foreign currency, though by policy the Company does not accept cash deposits in foreign currency.
   (ii) All series of cash transactions integrally connected to each other which have been valued below rupees 10 lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month.
   (iii) All transactions involving receipts by non-profit organizations of rupees ten lakhs or its equivalent in foreign currency.
   (iv) All cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place; any such transactions;
   (v) All suspicious transactions whether or not made in cash and in manner as mentioned in the Rule framed by the Government of India under PMLA. An Illustrative List of suspicious transaction pertaining to financial services is given in Annexure III A & III B

2. Records to contain the specified information
   The Records referred to above in Rule 3 of PMLA Rules to contain the following information:
   i. the nature of the transactions;
   ii. the amount of the transaction and the currency in which it was denominated;
   iii. the date on which the transaction was conducted;
   iv. the parties to the transaction.

3. Maintenance and preservation of records Section 12 of PMLA requires the Company to maintain records as under:
   i. records of all transactions referred to in clause (a) of Sub-section (1) of section 12 read with Rule 3 of the PML Rules is required to be maintained for a period of ten years from the date of transactions between the clients and Avanse.
   ii. records of the identity of all clients of Avanse is required to be maintained for a period often years from the date of cessation of transactions between the clients and Avanse. Avanse shall take appropriate steps to evolve a system for proper maintenance and preservation of information in a manner (in hard and soft copies) that allows data to be retrieved easily and quickly whenever required or as/ when requested by the competent authorities.

Avanse shall designate a senior employee as ‘Principal Officer’ (PO) who shall be located at the Head/Corporate office and shall be responsible for monitoring and reporting of all transactions and sharing of information as required under the law. PO shall maintain close liaison with enforcement agencies, NBFCs and any other institution which are involved in the fight against money laundering and combating financing of terrorism.

The Principal Officer shall report information relating to cash and suspicious transactions, if detected, to the Director, Financial Intelligence Unit India (FIUIND) as advised in terms of the PMLA rules, in the prescribed formats as designed and circulated by RBI at the following
address:
Director, FIU – IND,
Financial Intelligence Unit India,
6th Floor, Hotel Samrat,
Chanakyapuri New Delhi110021
[The employees of Avanse shall maintain strict confidentiality of the fact of furnishing/ reporting
details of suspicious transactions.

General

1. Customer Education
Avanse shall educate the Customer on the objectives of the KYC programme so that customer understands and appreciates the motive and purpose of collecting such information. The Company shall prepare specific literature/ pamphlets, etc. so as to educate the customer about the objectives of the KYC programme. The front desk staff shall be specially trained to handle such situations while dealing with customers
2. Introduction of new technologies
Avanse shall pay special attention to any money laundering threats that may arise from new or developing technologies including online transactions that may favour anonymity, and take measures, if needed, to prevent their use in money laundering. Avanse shall ensure that any remittance of funds by way of demand draft, mail/telegraphic transfer or any other mode for any amount is affected by cheques and not against cash payment.3.Applicability to Branches and Subsidiaries outside India
The above guidelines shall also be applicable to the branches and majority owned subsidiaries located abroad, especially, in countries which do not or insufficiently apply the FATF Recommendations, to the extent local laws permit as and when the Company opens overseas branches. When local applicable laws and regulations prohibit implementation of these guidelines, the same will be brought to the notice of Reserve Bank of India.
4. Closure of Accounts/Termination of Financing/Business Relationship
Where Avanse is unable to apply appropriate KYC measures due to non furnishing of information and/or non-operation by the customer, Avanse shall terminate Financing/Business Relationship after issuing due notice to the customer explaining the reasons for taking such a decision. Such decision shall be taken with the approval of Chairman & Managing Director or key managerial persons authorized for the purpose.
5. KYC for the Existing Accounts:
While the KYC guidelines will apply to all new customers, the same would be applied to the existing customers on the basis of materiality and risk. However, transactions with existing customers would be continuously monitored for any unusual pattern in the operation of the accounts.
6. Updation in KYC Policy of Company
PO after taking the due approval from the Board of Directors of Avanse shall make the necessary amendments/modifications in the KYC/ AML/ CFT Policy or such other related guidance notes of Company, to be in line with RBI or such other statutory authority’s requirements/updates/ amendments from time to time.

Annexure I

CUSTOMER IDENTIFICATION REQUIREMENTS (INDICATIVE GUIDELINES)
1. Accounts of Politically Exposed Persons (PEPs) resident outside India Politically exposed persons are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior politicians,senior government/judicial/military officers, senior executives of state-owned corporations,important political party officials, etc. Branch/office shall gather sufficient information on any person/customer of this category intending to establish a relationship and check all the information available on the person in the public domain. Branch/office shall verify the identity of the person and seek information about the sources of funds before accepting the PEP as a Customer. The decision to provide financial services to an account for PEP shall be taken at a senior level and shall be subjected to monitoring on an ongoing basis. The above norms may also be applied to the accounts of the family members or close relatives of PEPs.
2. Accounts of non-face-to-face customers In the case of non-face-to-face customers, apart from applying the usual customer identification procedures, there must be specific and adequate procedures to mitigate the higher risk involved. Certification of all the documents presented may be insisted upon and, if necessary,additional documents may be called for. In the case of cross-border customers, there is the additional difficulty of matching the customer with the documentation and the NBFCs may have to rely on third party certification/introduction. In such cases, it must be ensured that the third party is a regulated and supervised entity and has adequate KYC systems in place.
3. Trust/Nominee or Fiduciary Accounts Branch/offices shall determine whether the customer is acting on behalf of another person as trustee/nominee or any other intermediary. If so, they shall insist on receipt of satisfactory evidence of the identity of the intermediaries and of the persons on whose behalf they a reacting, as also obtain details of the nature of the trust or other arrangements in place. Avanse shall take reasonable precautions to verify the identity of the trustees and the settlers of trust (including any person settling assets into the trust), grantors, protectors, beneficiaries and signatories. Beneficiaries shall be identified when they are defined. In the case of a ‘foundation’,branches shall take steps to verify the founder managers/ directors and the beneficiaries, if defined. There exists the possibility that trust/nominee or fiduciary accounts can be used to circumvent the customer identification procedures.
4. Accounts of companies and firms Branch/office need to be vigilant against business entities being used by individuals as a front for maintaining accounts with NBFCs. Branch/ office may examine the control structure of the entity, determine the source of funds and identify the natural persons who have a controlling interest and who comprise the management. These requirements may be moderated according to the risk perception e.g. in the case of a public company it shall not be necessary to identify all the shareholders.
5. Client accounts opened by professional intermediaries When the Branch/office has knowledge or reason to believe that the client account opened by a professional intermediary is on behalf of a single client, that client must be identified.Branch/office may hold ‘pooled’ accounts managed by professional intermediaries on behalf of entities like mutual funds, pension funds or other types of funds. Branch/office also maintain’pooled’ accounts managed by lawyers/ chartered accountants for funds held ‘on deposit’ for a range of clients. Where funds held by the intermediaries are not co-mingled at the Branch/office and there are ‘sub-accounts’, each of them attributable to a beneficial owner, all the beneficial owners must be identified. Where such funds are co-mingled at the Branch/office, the branch/office shall still look through to the beneficial owners. Where the Branch/ office rely on the’customer due diligence’ (CDD) done by an intermediary, they should satisfy themselves that the intermediary is regulated and supervised and has adequate systems in place to comply with the KYC requirements. It should be understood that the ultimate responsibility for knowing the customer lies with the Branch/office.

Annexure II

Customer Identification Procedure Features to be verified and Documents that may be obtained from Customers

Features	Documents (Certified Copy)
Individuals (Applicant/ Co – Applicant) – Legal name and any other names used - Correct permanent address	a. Passport b. PAN card c. Voter’s Identity Card d. Driving license e. Identity card (subject to the Company’s satisfaction) f. Adhar Card g. Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of Company (i) Telephone bill (ii) Bank Account statement (iii) Letter from any recognized public authority (iv) Electricity bill (v) Letter from employer (subject to satisfaction of the Company) (Any one document which provides customer information to the satisfaction of the Company will suffice ) One recent passport size photograph except in case of transactions referred to in Rule 9(1)(b) of the PML Rules
Companies (Co – Applicant) – Name of the company – Principal place of business – Mailing address of the company – Telephone/Fax Number	(i) Certificate of incorporation and Memorandum & Articles of Association (ii) Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account (iii) Power of Attorney granted to its managers, officers or employees to transact business on its behalf (iv) an officially valid document in respect of managers, officers or employees holding an attorney to transact on its behalf (v) Copy of PAN allotment letter (vi) Copy of the telephone bill
Partnership Firms (Co – Applicant) – Legal name – Address – Names of all partners and their addresses – Telephone numbers of the firm and partners	(i) Registration certificate, if registered (ii) Partnership deed (iii) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf (iv) Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses (v) Telephone bill in the name of firm/partners
Trusts & Foundations (Co – Applicant) – (If applicable) – Names of trustees, settlers, beneficiaries and signatories – Names and addresses of the founder, the managers / directors & the beneficiaries – Telephone/fax numbers	(i) Certificate of registration, if registered (ii) Trust Deed (iii) Power of Attorney granted to transact business on its behalf (iv) Any officially valid document to identify the trustees, settlers, beneficiaries and those holding Power of Attorney, founders/ managers/ directors and their addresses (v) Resolution of the managing body of the foundation/association (vi) Telephone bill
Unincorporated Association or Body of Individuals (Co – Applicant) – (If applicable)	(i) Resolution of the managing body of such association or body of individuals (ii) power of attorney granted to him to transact on its behalf (iii) an officially valid document in respect of the person holding an attorney to transact on its behalf (iv) and such other information as may be required by Company to collectively establish the legal existence of such as association or body of individuals.

*‘Officially valid document’ is defined to mean the passport, the driving license, the permanent account number card, the Voter’s Identity Card issued by the Election Commission of India or any other document as may be required by the Company .

Annexure III

1. Broad categories of reason for suspicion and examples of suspicious transactions for Non Banking Financial Companies are indicated as under: Identity of client – False identification documents
   – Identification documents which could not be verified within reasonable time
   – Accounts opened with names very close to other established business entities
   Background of client
   – Suspicious background or links with known criminals
   Multiple accounts
   – Large number of accounts having a common account holder, introducer or authorized
   signatory with no rationale
   – Unexplained transfers between multiple accounts with no rationale
   Activity in accounts
   – Unusual activity compared with past transactions- Sudden activity in dormant accounts
   – Activity inconsistent with what would be expected from declared business
   Nature of transactions
   – Unusual or unjustified complexity
   – No economic rationale or bonafide purpose
   – Frequent purchases of drafts or other negotiable instruments with cash
   – Nature of transactions inconsistent with what would be expected from declared business
   Value of transactions
   – Value just under the reporting threshold amount in an apparent attempt to avoid reporting
   – Value inconsistent with the client’s apparent financial standing

2. Illustrative list of Suspicious Transactions

   • Reluctant to part with information, data and documents

   • Submission of false documents, purpose of loan and detail of accounts

   • Reluctance to furnish details of source of funds of initial contribution

   • Reluctance to meet in person, representing through power of attorney

   • Approaching a distant branch away from own address

   • Maintaining multiple accounts without explanation

   • Payment of initial contribution through unrelated third party account

   • Suggesting dubious means for sanction of loan

   • Where transactions do not make economic sense

   • Where doubt about beneficial ownership

   • Encashment of loan through a fictitious bank account

   • Sale consideration quoted higher or lower than prevailing area prices

   • Request for payment in favor of third party with no relation to transaction

   • Usage of loan amount for purposes other than stipulated in connivance with vendors, or agent

   • Multiple funding involving NGO, Charitable organization, small and medium establishments, self help groups, micro finance groups, etc

   • Frequent request for change of address

   • Over-payment of installments with a request to refund the overpaid amount

   • Approvals/sanctions from authorities are proved to be fake

   • Frequent request for change of address

   • Over-payment of installments with a request to refund the overpaid amount