COLLECTIONS POLICY - ART Housing Finance …...1 RAHFL/COLLECTION/22ND SEPTEMBER/VER2.0 COLLECTIONS...

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RAHFL/COLLECTION/22ND SEPTEMBER/VER2.0

COLLECTIONS POLICY

COLLECTION OBJECTIVE AND SUMMARY

BACKGROUND

ART Housing Finance (India) Limited [AHF] is a professionally managed housing

finance company (HFC), registered with the National Housing Bank (NHB). The

Company provides long-term housing loans to customers belonging to the Middle

and Low Income Groups in peripherals of urban India, semi-urban and rural

India.With financially sound promoters, visionary leadership and a highly

experienced team of home loan professionals, AHF provides its clients with home

loans to ful-fill their dreams of owning an dwelling unit. The Company strongly holds

that the dream of home ownership should be all inclusive & this belief is aptly

reflected in the company’s motto of‘Apne Ghar Ki Aas, Ko Pura Kare ART’.

Detailed product line and guidelines for lending are as per the Product and Policy

Guidelines.

OBJECTIVE

The collection activities will be huge, challenging, and complex considering the fact

that diverse product variants in HL and LAP will be launched PAN India starting

from NCR , Haryana, Rajasthan and Maharashtra for FY- 2016-2017. Each product has

its own peculiarities and collection strategies for handling its customers will vary.

Generally no two customers are alike in relation to their personal attitudes, problems,

means, etc. and thus style of handling the customers has to be flexible open and

customer centric. The collection activities may also be prone to frauds; errors etc

because it involves handling cash across locations and are also dependent on various

outsourced agencies. Considering the above facts it is pertinent to have Collection

Policy Manual encompassing all the details with proper description of Policies,

Procedures, Products etc.

The objectives of the Collection Policy Manual are given below:

To serve as a ready reckoner and guide for entire gamut of collection activities.

The entire collection practice encompassing all activities will be detailed and

available as a ready reference to all the relevant employees.

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To standardize and facilitate ease of understanding of entire collection related

activities.

Ensuring transparency and bringing objectivity in day to day operations.To

define control mechanism for various activities so as to minimize chances of

frauds, errors.

PRODUCT FEATURES

LOAN AGAINST PROPERTY (LAP)

It is a secured loan extended against residential, commercial or industrial property.

Different products & challenges are mentioned below: -

Loan for Commercial Property

Loan for purchase of a ready built commercial property

Loan Against Commercial Property

Loan to meet customer requirements against the security of a built-up commercial property

Loan Against Residential Property

Loan to meet customer requirements against the security of a built-up residential property

Balance Transfer for LAP Loan

Transfer of an existing loan against residential property from an approved institution

Balance Transfer for Commercial Loan

Transfer of an existing loan against commercial property from an approved institution

Loan Against Industrial Property

Loan to meet customer requirements against the security of a built-up industrial property

Since LAP is extended against property, the customer may use funds for

varied purpose such as buying another property or plot, acquisition of fixed

assets, working capital needs, business expansion, repairs / extension of

property or for debt consolidation with an view to control interest cost.

Due to complex ticket and nature of use of loan is not cleared , concentration

risk is on higher side. However, this aspect of risk is mitigated by low risk

profile. The other important feature of this product is that property prices

appreciate with time, the product is secured due to clear and marketable

title.

The funding is generally 65-75% of market valuation (refer Credit’s -

Product &Policy guidelines for details). The valuation is done by

independent valuer / Inhouse Technical Team appointed by us.

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The critical aspect in this product is clear, marketable title and proper

valuation of the property. Thus it is important that for each market we

appoint lawyers and valuers who are competent and are known for their

integrity.

The default rate, losses are lower but chances of frauds are higher, if proper

due diligence is not exercised by the lawyers while checking the

authenticity of the property documents. If valuation is faulty, we might end

up funding higher amount and in the event of default we will incur losses.

Attachment (or possession) of the property under SARFAESI Act is possible

which is fast process.

Thus, overall the collection approach would demand skill sets such as counselling,

strong follow up and maintaining regular communication with the customer. The

product requires good agencies in terms of lawyers, valuer to initially ensure clear

and marketable title and subsequently requires putting good efforts on the part of

lawyers to fetch us Quick recourse under arbitration on timely basis. The collection

Team will require good network to sell these properties after the attachment at the

right place & price.

HOME LOAN :-

Under this product, below mentioned categories are covered :-

Home Purchase

Loan for purchase of ready built/ under-construction residential property

Home Construction

Loan for construction of a residential property

Home Extension

Loan for extension on an existing residential house be it an additional room, additional floor, a larger bathroom, or even enclosing an open balcony etc.

Home Improvement

Loan for renovation/ makeover, both internal, as well as external, of an existing residential house like tiling and flooring, painting, plumbing and electrical work, waterproofing and roofing, grills and aluminum windows, waterproofing on terrace, construction of underground/overhead water tank, paving of compound wall etc.

Home Composite

Loan for purchase of a plot and construction of a residence thereafter within a specific time

Home Plot Purchase

Loan for purchase of a residential plot of land

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Home Balance Transfer

Transfer of a Home Loan from an approved institution

Home Balance Transfer + Top Up

Transfer of a Home Loan from an approved institution with the facility of a top-up loan.

Challenges :-

Even after possession, resale will always be a challenge due to falling resale

prices of property at exponential rate- As per todays market trends .

Collection focus is in-house due to the requirement of strong follow up,

regular field visits , initiation of legal activities with increase in DPD .

ROLES & OBJECTIVES OF COLLECTION TEAM

To proactively review the potential delinquencies through early warning

signals by way of FPD / SPD.

To monitor various delinquency parameters and strive to ensure the

delinquency is at the lowest level by benchmarking against industry

standards.

To ensure achievement of highest standard of collection efficiency. The

best and ideal measure is to collect promptly when the amount is due.

To minimize credit related losses.

To maintain optimal customer relationship.

To periodically review fresh CIBIL, Security, Sourcing capacity of all

delinquent cases.

To minimize cost of collections.

To display high level of transparency, objectivity, integrity in dealing

with both internal and external customers.

To adhere to “Code of Conduct”, Procedures, Policies and guidelines of

the company & NHB.

CHALLENGES

Some of the customers have poor wealth management skills, weak banking

practices. As a result, repayment capacity of the targeted customers is under

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pressure and they are prone to defaults. Customers are getting over-

leveraged due to aspirations for better life style and consumerism has led

to increase in defaults even amongst customers with good repayment

record in past. Thus, there is a challenge for collection team to keep

delinquency and losses under control under the present economic

environment.

To keep pace with growth in volumes from business.

To manage the complexity of collection across geographical distance, states

and districts .

LTV ratios are increasing which in turn increases the asset risk and losses in

the event of possession ( in case of decreasing property value ) . Thus if the

collection team possesses asset on default, chances of losses are on higher

side. Hence the challenge is to execute smart possession strategy, liquidate

at best possible prices and also to possess on a timely basis.

Customer sensitivity and sentiments coupled with media / social activism,

there are risks of adverse publicity. Hence collection matters need to be

handled in a professional and transparent way.

RESPONSIBILITIES OF COLLECTION EXECUTIVE POSITIONED AT

BRANCHES

Sr.

No.

Responsibilities

1 To limit the portfolio within delinquency parameters such as 30+ % POS,

60%POS, 90+ % POS, lagged delinquency parameters, manage roll rates

targets bucket wise, collect penal charges vis a vis targets. Regular field

visits on chronic and regular defaulters. Not allowing any case to enter in

to 30+. Initiating legal activities on all 30+ cases. Early bird catches the

worm .

2 To ensure prioritization and quick resolution of non-starter cases- FPD visit

to be made by Regional Credit Head (designated person- if on leave ) along

with Regional Sales Head (designated person- if on leave ) & Regional

Collections (designated person if on leave ) for resolution / Collection .

For preventive cure and correction - a letter from customer mentioning

reason of bounce and commitment of no future bounces to & photograph

with customer of all company officials to be obtained and maintained at

Office in a File . Same to be shown as and when required by Senior

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Sr.

No.

Responsibilities

Management / Audit Team . Customer service and sales related issues in

such cases , should be highlighted to OPERATIONS HEAD.

3 Ensure proper allocation of cases, Curing as per collection strategy and

keep track of manual allocation, re- allocation in the collection system.

4 To Provide regular feedback to Policy, Risk, FCU on Negative Areas /

Profiles / Negative Industry Trends.

5 To conduct periodical review of all 30+ cases, fraudulent cases.

6 Adhere to collection policies, procedures and code of conduct and ensure

proper training to off rolls staffs, agencies personnel.

7 Regular review of various collection MIS generated through collection

system. Maintaining collection dashboard and presenting it to MD & CEO

every week.

8 Regularly visiting legal Agencies. Holding regular meeting with their

lawyers for reviewing their performance.

9 Optimally use collection system features. Train collection agency-

personnel, off roll staff for Company process and policy, integrity,

compliance and spirit.

10 Report immediately to RSM / RCU Head in case customer tries / entices

the collector with any kind of gift/ bribe with an intention of stalling the

efforts of recovery.

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TRAINING

Periodical training should be conducted as given below. The purpose is to ensure all

collection team, agency staffs are well aware of our policies, process, system, plan,

targets and code of conduct.

TRAINING CALENDAR

Conducted by whom

Imparted to Training Needs Frequency

RSM

Entre Sales Team (Collections Team – off roll and on roll as and when collections vertical is built up).

1) Telecalling concepts.

Initially for all Sales staff subsequently every 3 months for all new joinees or those requiring refresher training.

2) Filed collector concepts.

3) Code of Conduct.

4) Receipt book process.

6) Collection System & Updation of action codes.

7) Billing process.

8) On the job training.

9) Use of Mobility and its benefits .

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Business Head

RSM and ASM

1) Training on collection system. Initially for entire

sales team and subsequently every 3 months for all new joinees or those requiring refresher training.

2) Collection policies.

3) Overview on collection Plan & target.

4) Legal Tools & procedure.

5) Code of Conduct.

CODE OF CONDUCT FOR COLLECTION AND RECOVERIES

To abide all laws governing that place, adhere to all regulations and

policies.

To ensure secrecy of all collection related data and not to share it with

outsiders.

Apply consistent approach in all collection activities.

All sales team (collections team – when required) needs to abide by

Collection policy, operating instructions before commencing any collection

activities and they need to give in writing that they shall abide by laws,

regulations and policies.

All collection activity ( tellecalling ) needs to be recorded through dialler

system and documented in the collection system. Such records will be

auditable and need to be accurate (In future when Collections Call Centre

is set up ).

As prescribed in the manual, collection team should ensure proper

maintenance of registers and files.

All sales team members including DST should be dressed neat and tidy,

identity cards need to carried at all collection related calls.

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As and when customer disputes the debt, the same should be immediately

referred to company superiors for resolution.

Customer should be treated with dignity and should not be abused. No

written or verbal threats are permitted.

All collection activities should preferably be carried out between 9 am to 7

pm only.

Customer debt should not be discussed with other competitors.

Customer should be ordinarily contacted at residence, customer may be

contacted in office, in case the customer objects, alternative place of

discussion should be decided and discussion should be carried out at the

specified place.

Do not enter customer residence against his/her wishes.

Don’t have any discussion of personal nature with the customer.

Customer request for complete information should be honored at all times.

Leave the message if customer is not available at home or office. Do not

discuss financial matters or harass other family members who are not party

to the loan.

Don’t make any unauthorized commitments on behalf of the company for

any waivers/ settlements/ compromise/ schemes/ extension of time.

As far as possible, talk to the borrower in the language which she/he is

more comfortable with.

Always thank the customer for the time you spent with him.

Report immediately to the Zonal Sales Head / Regional Sales Head in case

customer tries to entice with any kind of gifts/ bribe with an intention of

stalling the efforts of recovery.

CRITERIA FOR STARTING BUSINESS IN NEW LOCATIONS

Define and understand the geographical limits for business. Presence of

infrastructure in terms of various collection agencies and law firms with

manpower and infrastructure possessed by them in terms of office space, email

connectivity, computers and telephone lines.

Verification or FI agencies ( vendors ) should have database of default

customers. This will help in identifying or weeding out market defaulters for

the particular market. Presence of such FI agencies (vendors) in local market is

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mandatory, they should have atleast 3-5 of experience working in that field

with other HFC’s and NBFC’s in same product – HL and LAP .

Confirmation with existing companies – HFCS and NBFC’s through references

on “negative profiles and negative areas” for that market. The roles of lawyer

are very important with regard to collection of original property papers before

disbursement and also verify genuineness of title and other search regarding

lien of other financiers etc. Before appointing lawyers and signing service level

agreement with him/her, proper reference check on his / her credibility and

integrity needs to be taken. This is also one of the criteria before deciding to

start business in such locations i.e. presence of good lawyers to render service

of collecting property document and ensure its genuineness through proper

title search.

Role of law firm is very important for resolving high DPD cases. They should

be capable of getting all necessary orders from court in fastest possible time.

Proper reference check on competence, credentials of various lawyers

providing such type of services needs to be taken.

The role of valuer ( TECHNICAL TEAM ) is also very important with regards

to valuation of property. Here too we need to conduct proper reference and

integrity check on the valuer. In higher ticket (>25 lacs) cases it is advisable to

have 2 Technical reports generated . Thus, it is important to have competent

and honest valuers who can give accurate estimate about valuation of

residential or commercial of industrial property.

The above checklist will be prepared by Operations Head for Legal ,CFO for

Technical and Business Head for business , subsequently the same should be

forwarded to MD & CEO for sign off. Post the sign off approval for

commencing business in new locations can be initiated by the CFO/BH.

The records pertaining to approval including negative areas, negative profiles

needs to maintain by Portfolio ( Credit ), Risk/ Collections . In case of any

change, approval needs to be initiated as mentioned above.

Connector appointment – Connectors should be appointment after completing

all KYC formalities , CIBIL generation , Bank Account Statement verification ,

Office and resi verification ) , as these will be fronline people who will be

generating business for AHF .

CRITERIA FOR DETERMINING NEGATIVE AREAS FOR A LOCATION

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Predominantly slum area.

Areas with higher default and fraud.

Areas where collection, possession will be difficult.

Areas known to be inhabited by anti – social elements, gambling dens.

Areas having history of frequent communal riots.

Areas dominated by particular community (com-dom ) who have track of

default and poor intentions.

The above checklist needs to be considered before fixing up negative areas for any

location. Based on above factors, recommendation for negative area needs to be given

to Zonal Sales Manager - ZSM / Risk Head. The joint sign off of approval from

Business Team, Portfolio Team & Risk team to be obtained for any addition or deletion

in the list.

ACH & PDC MANAGEMENT

The repayment of loan is paid by customer in the form of EMI (Equated Monthly

Instalment). The EMI covers both principal and interest portion. The repayment is

made on monthly basis. The tenure of the loan varies from product to product.

Maximum tenure for each product category is given below:

Product Maximum Tenure#

LAP 15 Years

Home Loan 20 Years

# for details refer Product and Policy Guidelines prepared by Credit Team .

The EMI Payment is made in one of the following ways:

ACH – Automated Clearing House . ( Preferably )

Post Dated Cheques – PDC’s .( 36 minimum if ACH not registered )

DSS – Deduction from Salary Source .

Note :- *** All locations will be told to register all their accounts in to ACH .

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COLLECTIONS & DELINQUENCY

Collection is art of collecting money from defaulted / broken EMI customers, where

in educating them about consequences of default.

The collections process is defined as the set of coordinated, appropriate, and timely

activities aimed at full collection of loans from clients.

Collection Secrets: -

Does your customer possess 6 C’s of Credit ??

Character.

Capacity.

Capital.

Collateral.

Conditions

Credit Record.

Collections reduce losses incurred by the company.

An account is marked delinquent when EMI gets bounced or the same is unpaid.

Delinquency refers to customer who has defaulted on his contractual obligations to

make payments when due and as agreed in the agreement at the time of availing the

loan.

Therefore, customer delinquency is measured in terms of number of days past due the

agreement date or contractual date and popularly referred as DPD (Days past due).

The delinquent accounts for convenience of operations / finance and credit team are

segregated into DPD and their segments are referred as buckets. The collection

strategy or curing of delinquency varies depending on days past due or buckets. The

bucket definition for the sake of other departments is given below:

BUCKET DAYS PAST DUE BAND (DPD)

X 1 – 30

1 31 – 60

2 61 – 90

3 91 – 120

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BUCKET DAYS PAST DUE BAND (DPD)

4 121 – 150

5 151 – 180

6 & ABOVE 180 +

REASON FOR DEFAULT

It is important to understand why customer defaults. Most of the customers intend to

pay their debt. The repayment of EMI is a function of customer ability and intentions.

External and internal conditions would impact customer serviceability of EMI. The

external conditions are uncontrollable. Internal conditions are controllable and

collection team should strive to control these factors so as to collect promptly when

due. The collection department will have to pursue different strategies keeping in

mind the following set of customers:

Customer who pay promptly,

Customer who are habitually late and who require lots of persuasion and

follow up.

Customer facing temporary financial hardship due to loss in business, loss in

job, medical expenses, marriage in family, unusual high expenses etc.

Customer who are fraudulent and with bad intentions ( Fraud = Mutiple

funding / forged credentials / forged property papers ) .

Thus, understanding reason of default is very pertinent to apply right kind of

collection strategy and collect the dues effectively.

MEASURING DELINQUENCY:

Total 30+ POS

Delinquency % 30 + DPD = ---------------------------------------------- * 100

Total POS for entire live portfolio

POS = Total Principal Outstanding .

Total 90+ POS

Delinquency % 90 + DPD = ---------------------------------------------- * 100

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Total POS for entire live portfolio

The delinquent POS of bucket is measured to get an idea regarding portfolio quality,

efficiency of collection strategies for that particular band. The said percentages are

reviewed against benchmark % for each bucket.

FLOW:

The movement of accounts from one DPD to another month to month is called flow.

The rate of that flow is called roll rate.

The new flow is combination of 3 movements as given below:

1. Normalisation: - Movement of a contract from a higher DPD to current , means –

customer has paid all outstanding EMI’s . Example – If a contract is in 31-60 DPD

with present month emi bounce and if he clears / paid off all EMIs , that contract

will be considered as Normalised .

2. Forward Flow: Movement of contract from lower to higher DPD. Example form

31-60 to 61-90. This means that no EMI is collected in current month for this

account.

3. Stabilization: The account that does not change its DPD in the next month. This

could be due to either collection of 1 EMI but default of current month EMI or

clearance of current month EMI but non- collection of previous month EMI.

4. Roll back / Back Flow: If more than one EMI is collected in the same month and

depending on the number of EMI’s collected, the account flows back in the

corresponding DPD. For instance if any account is in 90-120 DPD, if 2 EMI’s are

collected it flow backward in 30-60 DPD.

5. Roll Rate: The rate of flow of the stock from one DPD to another, month on month

is called Roll Rate.

Stock in a DPD in current month

Roll Rate = ---------------------------------------------- * 100

Stock in previous DPD in previous month.

It can be interpreted that lower the roll rate, better the delinquency control practices

for that particular band or bucket.

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LAGGED DELINQUENCY:

In a growing portfolio it is also imperative to the portfolio by rolling back the effect of

increasing volumes. This is done by taking out the effect of current month booking

and computing the respective portfolio indicators.

30+% = [ (Sum of bucket 1 POS current month / Total POS (X-1 months) + [ (sum of

Buckets 2 POS current month / Total POS (X-2 months) + [ (Sum of buckets 3 POS

current month / Total POS (X-3 months) ] + [ (Sum of buckets 4 POS current month /

Total POS (X-4 months) ] + [ (Sum of buckets 5 POS current month / Total POS (X-5

months) ] + [ (Sum of buckets 6 POS current month / Total POS (X-6 months) ] * 100

90+% = [ (Sum of bucket 3 POS current month / Total POS (X-3 months) ] ] + [ (Sum

of buckets 4 POS current month / Total POS (X-4 months) ] + [ (Sum of buckets 5 POS

current month / Total POS (X-5 months) ] [ (Sum of buckets 6 POS current month /

Total POS (X-6 months) ] * 100

X indicates current month e.g. X-2 means Total POS two months’ back

WRITE OFF:

Delinquent accounts moving into certain DPD are considered write off in the books of

accounts. The quantum of write off is linked to DPD and product category. Loss

provisioning norms is explained at length under “Loss Provisioning Norms”. Write

off happens under following circumstances:

Flow Loss: Any account where no payment has been received for more than

particular DPD.

Settlement Loss: Loss incurred when an account is foreclosed at a value lower

than the outstanding amount.

Accelerated Loss: This happens when a contract is declared as Fraud and case

can be marked under this loss irrespective of movement of bucket as decided

by management.

Loss on Sale: This happens when a property is sold at a price lower than total

principal outstanding on that account . Gap between sold amount and

outstanding amount is known as LOSS ON SALE – LOS .

RECOVERY

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The actual amount of collections done from the written off pool is called recovery. The

amounts recovered from write off are appropriated primarily to the principal

outstanding in the account.

GROSS CREDIT LOSSES (GCL)

Gross Credit Loss (GCL):

GCL = Loss on Sale + Settlement Loss + Flow Loss + Accelerated Loss + LOS .

NET CREDIT LOSSES (NCL)

The measure for determining the quantum of credit losses for a portfolio as a whole is

termed as Net Credit Losses (NCL). The NCL amount arrived is also calculated as %

of Principal Outstanding or ANR (Average Net Receivables). Such measure will give

fair idea about quantum of credit losses in portfolio and also give fair indication about

health of portfolio.

NCL = Gross Credit Losses (GCL) – Recoveries.

GCL = FLOW LOSSES (PROVISIONING FOR ACCOUNTS GREATER THAN 90

DAYS DPD)+LOSSES ON POS BOOKED ON ACCOUNT OF SETTLEMENT WITH

CUSTOMER + LOSSES ON ACCOUNT OF ACCELERATED PROVISIONING (

FRAUD CASES ) + LOS( LOSS ON SALE ) .

Every month such list of cases will be handed over to Loss recovery cell. The

collections system reports module will be used for generating such details. The

following format will be used for handover of cases to Loss recovery cell. The same

format will be used for review of any recovery after allocation.

Product Branch Agreement No

Name Amount Financed

Foreclosure Loss Date Category Amount Received

Loss : Loss on principal

Date: Date of handover to loss recovery cell

Category: Whether loss on sale after possession, write off on account of frauds,

100% provisioning, loss on negotiation with third party.

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Amount Received: Amount collected by loss recovery cell.

The above format needs to be reviewed once in month by Zonal Business Head with

loss recovery cell.

The collection process for recovery in such cases will be as under:

Post sale notice for possessed asset or legal notice for skip/ fraudulent cases

will be sent to customer, co applicant and guarantor.

Legal notice is followed by counselling by collection team member under loss

recovery cell.

Hard collection through agencies will be pursued.

Legal cases such as Sec 138, Sec 156, arbitration, civil summary suits, winding

up petition for companies will be filed against customers and pursued for

further recovery.

Notice, Counselling, Hard Collection:

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COLLECTION STRATEGY

The collection strategy or the follow up process is lined to the nature of product,

ageing in terms of number of days, profile of the customer and also on timing of

default. For non starters ( FPD ) , the collection strategy will be different

The collection strategy though is predominantly based on DPD or buckets as

explained earlier, also depends on the products because of the characteristics of the

product. It is therefore pertinent to summarize strategies based on the Product & DPD.

The collection strategy for different product is summarized below:-

DPD/BUCKET STRATEGIES REMARKS

(X) & 1-30 1. Awareness calling between T-5 days for live book and T-2 days for repeat bouncing cases. Also SMS to be sent to all live customers by T-5 days .

2. On receipt of bounce and failed PTP by customer 2 times Field Visits will be commenced for all cases.

3. Telecalling will be done either by: Inhouse team or outsourced agency. Tele-callers will organize pickup for payments and allocate the same to the concerned sales executive

4. In case of service issues or sales related commitment issues, branch manager/ area sales manager to be immediately informed and his help to be taken for resolving such cases. Non starter case/ FPD– Sales Team ( For future -collection team ) will address the issue with credit and sales team & prioritize collection activity for such cases. The sales team will ensure collection of EMI in same month. Also proper cure and correction of such cases needs to be initiated by CREDIT so that such cases are not repeated for future bounce – SPD /TPD . Visit of Branch Credit Head/ Hub Credit head will be mandatory on such cases . A separate MIS will be published on National Basis tracking opening of FPD cases vs Collection . Corrective action road map on such cases needs to be shared by Regional Credit Head .

FPR-Call Centre/ OPERATIONS

FPR-CREDIT/SALES

- RO / RM / SM / ASM

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5. Efforts should be made to follow up with the co applicant/ guarantor for all non-starters, chronic and skip cases as applicable.

6. All cases declared as skip, chronic, non starter should be personally visited by Branch manager.

31-60 (1) 1. 100% field collection by Sales Team – RO , RM , SM , ASM , RSM for HL /LAP Cases . Visit on SPD cases will be prioritized , Collection Team will visit such cases where there is no resolution even after intervention of risk/credit .

2. Efforts should be made to follow up with the co applicant/ guarantor for all non-starters, chronic and skip cases as applicable.

3. All cases declared as skip, chronic, non starter should be personally visited by collection team.

4. Legal to be initiated on the 30th day of bounce .

5. Legal action in for of notice, criminal case shall be immediately initiated on fraudulent cases or customer with bad intentions.

6. Pressure should be created on co-applicants/guarantors (Spouse/mother PDC to be banked ) for Sec 138 .

7. Credit will stop log in of files as and when any case enters in to 30+ for any branch / customer care centre . Deviation can be approved by BH/Risk Head .

FPR is SALES.

61-90 (2) 1. Legal notice (sec 138, loan recall) to applicant, co-applicant, guarantor. In case of the firm – notice to be sent to proprietor, partner.

2. Cases will be allocated to skip tracking agencies for skip cases. Collections manager to seek help of the agencies / police.

3. Cases will be allocated to different agency specialized in hard collection. Same to be handled

FPR- SALES

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by Regional Business Head and also Legal team to be involved.

4. FCU team to submit a fresh report for the said cases.

5. In fraudulent cases, Criminal proceedings may be initiated against customer, co applicant, and guarantor.

6. Visit by Business Head & MD CEO shall be mandatory for all accounts in this bucket.

7. Customer facing temporary cash flow problems, loan extensions or rescheduling may be considered subject to approval of Risk and Business Head.

8. Recommendation by CCR –Collections to close the Branch/ CCR to be taken to CEO MD .

90+ 1. Pursing legal cases under Sec 138, Sec 9, and Civil recovery under arbitration for creating pressure on customer.

2. Property attachment/ possession under ARBITRATION/ SARFAESI proceedings shall be liquidated as per process dictated by court defined in manual.

3. Initiation of LOS . 4. Rotating cases of different hard collection agencies.

FPR –

( COLLECTIONS ) & LEGAL.

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ALLOCATION OF CASES TO SALES :-

Allocation of cases is a crucial activity in the entire collection cycle. Following points

are to be noted for allocation: -

During the course of collection cycle, frequently review cases and based on Collection

executive feedback , decide and determine course of action to be adopted. If require,

reallocate, or transfer the cases to the different Sales executive .

Bucket Sales Head

X & 1-30 RO / RM

31-60 RO / RM

61-90

SM / RSM / ASM

90+ Collections / Legal

Centralised Collections Resource will follow up with local sales people to

ensure EMV and LEV .

Penalty Clause :- Collections will recommend stopping of log in of files of in a

Branch / Customer Care Centre , as and when any case enters in 30+ DPD .

Legal process to be started post 30+ DPD.

Allocation is done on monthly basis to ensure adherence , RSM and ASM is

responsible for this activity. Delinquent cases will be allocated to concerned ASMs .

ASM Wise MIS needs to be published for such cases by Central Collections Resource

. RSM and ASM needs to keep the track of allocations for Business Head to review.

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PAYMENT COLLECTION

While accepting payments from customer below mentioned points needs to be notice.

For cash collection above 49,999 PAN CARD Copy needs to be mandatory

collected from customer.

Payments can be collected in form of NEFT / RTGS / IMPS / DD / PAY

ORDERS / BANKERS CHEQUE made from account of customer, co-applicant

, guarantor.

Payment made by customer needs to be restricted , any deviation lies with BH.

Since we will be operating in segment . Our customer profile will be of low

income segment and there will always be a risk of funds being spent by

customer before paying full EMI . In that scenario – part EMI collection will be

allowed with due approval from Business Head . System should also be

equipped for same . Same to be incorporated in Finance Team policy .

COLLECTION STEPS

Welcome Call ( Mentioning Loan Amount , Tenor , ROI etc .

Awareness Calling for both before pre-emi presentation and emi presentation.

Telecalling and counselling concepts.

Dunning (Letter, Email , SMS).

Field visits to Delinquent Customers.

Legal Action.

Possession.

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Sale of property .

Filing Loss on Sale .

AWARENESS CALLING

Awareness calling is to make customer aware through telecalling about his/her first

EMI date. It therefore, serves as a gentle reminder to the customer to make

arrangement of funds in his bank account on or before the due or cycle date. Case wise

detail of loan disbursed is being sent to the collection team by operation/ finance

department or can be generated from the system. The queues for the same should be

defined in the collection system. The telecallers will call these customers for creating

awareness about first EMI date.

The objectives of Awareness Calling are as under:

Information to customer about his / her EMI date.

Reduce default and EMI bouncing

Confirmation on customer contactibility

Confirmation of address and contact numbers

Confirming delivery of asset or disbursement amount

Understanding initial customer service related issues or disputes

Early warning about probable non starters or skips .

Overall it is a proactive and important strategy to reduce defaults, and iron out

customer service related issues in the initial phase. It will also facilitate future

contractibility through confirmation and capturing of contact details. It is also

important that data collected during the awareness calling is captured in an organized

way so as to facilitate its usage subsequently. The same can be captured in the

collection Management system.

Awareness Calling Strategy is mentioned below: - (T is presentation date).

Pre EMI EMI

Calling T-2 T-5 T-2

SMS T-5

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For cases with nil bounce for last one year, tellecalling and SMS to be done once only.

For cases where customer is bouncing regularly, tellecalling and SMS to be sent twice.

Also Centralised Collections resource to visit on such repeat bouncing cases to know

reason of bounce, educating customer about default , bounce , how clearing emi from

bank will help customers , what is CIBIL , legal tools used , their advantages and

disadvantages for customer .

COLLECTION FOLLOW UP THROUGH TELE CALLING

As explained earlier, collections effort is linked to the ageing of accounts which is

popularly called as buckets. Thus, customers are classified into buckets on the basis of

number of days for which EMI is overdue. For instance, a customer whose amount is

outstanding up to 30 days is said to be in bucket X, if EMI is outstanding for 1-30 days

is said to be in bucket 1. Similarly, if EMI is outstanding for 31-60 days, the customer

is said to be in bucket 2 and so on.

Tele calling as one of the collection strategy is an important tool for collecting

effectively and efficiently in bucket X. The objective of telecalling primarily is to get a

commitment on payment collection in stipulated date and time. This strategy is very

important in controlling delinquency in all the products. Normally experience shows

that customer pays promptly to the creditors who constantly follow up with him. The

lenient creditors are generally ignored and made to wait. Thus, telecalling as one of

the follow up tool has to be structured, result oriented, focused, well documented in

the collection system module.

The purpose is to maintain structured approach and pursue sequentially, but the

telecaller should be flexible to adapt according to the customer’s mood. Each call is

unique in its own way. However, uniqueness and flexibility in the approach is to be

maintained within constraints of policies, procedures and systems.

Telecalling activity will accomplish following objectives:

Initially the customer needs to be intimated about the EMI bounce. If customer

is not available, this information needs to be provided to the family member or

the key contact person at the office.

If the contactibilty is not established, correct telephone no. to be ascertained

though references mentioned in Application Form , Guarantor’s Mobile

number and address ,through directory information such as Naukri.com / just

dial, etc. if the telephone no’s or addresses are changed, the same needs to be

updated in the collection system.

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If payment is ready, the same needs to be collected. Here the role of telecaller

is to organize appointment for pickup of EMI.

If payment is not ready, obtain promise to pay commitments. The PTP (promise

to pay) commitments should not be later than 3 days from the date of calling.

The telecaller will follow up again with customer on PTP date for payment. The

telecaller should not take more than 2 PTP’s for an EMI. If more than 2 PTP’s

are broken by the customer, the case will be referred to entire sales team.

There could be possibility that telecaller may not be able to establish contacts

with customer. The telecaller will continue to make attempts to establish

contact. If telecaller fails to establish contact even after four attempts, the case

will be referred to field visit.

Such referral or allocation will be done by collection team depending on the

action codes available in the system by telecaller.

If contractibility is not established for non starter cases, it will be immediately

referred to ASM & SM for visit that particular day and reported to Business

Head and Risk Head .

As mentioned earlier, the telecaller should update all the action codes after each

attempt at telecalling in the collection system. The collection manager will

record telecalling efforts and the same can be captured from the system through

various reports. The various reports available in the collection system gives

information regarding collector performance with regard to generation of

PTP’s, establishing contacts, PTP success rate, pickup established and success

rate. The performance review of the telecaller is on the basis of such reports.

TELE CALLING CONCEPTS

The below topic explains some of the concepts which will assist telecaller in making

effective telecalls to the delinquent customers. The telecalling process can be divided

into following

STEPS

Preparation before making call

Opening a Call

Listening

Problem solving

Closing the call.

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PREPARATION BEFORE MAKING CALL

From the collection system, get the details about the customer/ owner

of property such as contact no, loan amount, EMI details, Principal

Outstanding, Property address , Past track details, bounce EMI details,

Bank account details etc. Prior preparation helps in making calls

effective and to the point.

The telecaller may also refer past action codes on the same customer in

the collection system to get an idea about customer trait with regard to

repayment of loan.

OPENING CALL

The objective here is to greet the customer pleasantly, introduce yourself

and make sure that you are speaking to right person on the other side.

Indentifying the customer is very important. In fact, financial details of

the customer should not be discussed with anyone apart from the

customer or close family members.

The purpose of call should also be explained using telelcalling script.

Script should clearly mention about presentation date / date of

maintaining balance . “ T-1 “- T is date of presentation .

The important point while greeting is to smile so that voice conveys the

same across telephone. Establishing conductive terms at this stage with

the customer is very important.

LISTING

Here the important point is to listen after opening a call and this will

help the telecaller to understand reasons for default.

The telecaller should take care to not to interrupt while customer is

making a point and try to be patient.

The telecaller should also be responsive and should try to get more

details by asking open ended questions such as

How/When/Why/What.

PROBLEM SOLVING

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At this stage, telecaller tries to gain control over conversation and try to

impress upon the customer that he needs to pay and accordingly obtain

commitments from the customer.

Telecaller may take help of pervious action codes in the system to

impress upon the customer regarding his past repayment,

commitments, failure to honor commitments etc. The telecaller by being

factual and using the details on system can improve his/her negotiation

skills and improve his/her prospects to obtain commitment from the

customer for payment.

The problem solving can be achieved through proper handling of

objections. It is important that misconception, suspicion of the customer

needs to be allayed. The misconception may be due to lack of

information and due to fact that he might be mislead by DSA or by our

own colleagues. It is important to educate the customer with necessary

information and clear doubts if any. It will be a mistake to assume that

customer knows everything about financial details and other terms.

The customer does not trust and may always be suspicious because of

the past customer service issues. The telecaller need to take

responsibility for earlier mistakes and apologize and solve immediate

problem with care and urgency. This will help to remove suspicions and

help the telecaller earn respect of customer.

CLOSING THE CALL

The telecaller needs to close the call positively. Collection calls often are

not pleasant. It is important to end the call pleasantly. It is important to

be courteous while closing the call. The telecaller should summarize the

entire call and counter check whether the customer has noted down the

information given during the call. Some of the phrases which can be

used while closing the call

Mr. _________ Can we expect payment by X-date of this month?

Mr. _________ valuable client like you can always contact us on this

telephone no for any matter.

Courteous note at the end could ne “Have a Nice day “or it was pleasure

talking to you or Thanks for your valuable time.

TELE CALLING DO’S & DON’TS

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All the customers and other parties concerned deserve to be treated with dignity. One

should avoid communications bordering on abuse/rudeness etc. No written or verbal

threats, abuse or rudeness is permitted. Only acceptable business language should be

used at all times.

The Telecalling agents should always identify themselves and the company they are

representing when speaking with the customers.

Customers are entitled to privacy therefore the following to be kept in mind at all

times.

Customer should be preferably contacted between 0900 hrs and 1900 hrs.

Customer should not be called more often than is reasonable.

The customer should ordinarily be contacted at his/her residence however if

the office address is provided as mailing address, then attempt to contact

him/her may be made there.

Customer requests that calls/visits to place of work be stopped are too honored

if he/she provides a suitable alternate place where they may be reached during

working hours.

Customer’s debt/obligation may be discussed with the customer and the

customer’s spouse or any other third party (Lawyer / accountant etc) only if

permitted by the customer specifically and records of such permission should

be available on record.

Customer request for the complete information to be honored at all times.

Do not restrict/harass the customer in any way.

The agents should not mislead the customer on the proposed action and

consequences thereof.

Do not have any discussion of a personal nature with the customer.

Do not use means that are unfair like for example collect sums in excess or using

threat of physical harm, wrong application of payment received in case the

customer has multiple debts.

Where the customer disputes the debt same should be immediately referred to

the company for resolution of the dispute/ fraud case.

Customer debt information cannot be shared with the third parties except as

agreed by the customer in the terms and conditions of the loan mentioned in

the agreement.

COUNSELING

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The counseling approach during telecalling helps in making customer aware about

importance of paying up on time. Idea is to install message in the mind of the customer

that paying for AHF should be his/her first priority.

Some of the points which can be highlighted are given below:

The benefits of prompt repayment can be highlighted to the customer who could be

as under:

No payment of bounce charges & penal charges. Thus, saving on extra charges.

No collection calls and follow up activities and hence mental peace

Higher social status

Credit rating with other companies also better through prompt repayment,

CIBIL updation and hence good credit history. This can be leveraged in future

by the customer to negotiate better interest rates.

By highlighting the above points, the customer will see merits and demerits of

maintaining proper repayment track.

DUNNING NOTICE

Dunning is an effective collection follow up tool. Dunning is a written communication

to remind customer to pay overdue EMI. The written communication should be polite,

to the point and firm and should impress upon the customer to fulfill his obligations

to repay the loan on timely basis.

The impact of written communication is quite effective at times as compared to verbal

communication. At latter stage, such written correspondence could be useful for legal

cases. The collection system has facility of generating dunning letter and same should

be used.

The key points pertaining to this strategy is given below:

To be done after receipt of second bounce (1-30 DPD) . Preferably it should be

done after PTP is broken or a tele calling attempt of customer fails to establish

any contacts.

There is a possibility that Dunning Notices may return. Such notices without

opening the envelops should be filed by the collectors at Branch with Branch

Manager for easy retrieval at the time of filing legal cases at subsequent stage.

These Dunning Notices could be sent by company appointed lawyers or by in

house collection employee . The collection system has facility of generating

SMS, email, letters and these features should be used to create firm pressure on

the customers for paying up the overdue EMI.

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MISCELLANEOUS EXPENSES AND APPROVAL MATRIX

In event of any miscellaneous charges incurred by Collections team while dealing with

Police men, Lawyers, Court Bailiffs , Receivers below mentioned approval matrix to

be followed :-

Approving authority Amount

CFO/ Risk Head / Business Head 10000

MD & CEO Above 10000

LOSS PROVISIONING NORMS (NPA PROVISIONING NORMS)

As per industry practices, cases which are more than 90 days DPD are to be

provisioned for losses. Higher the DPD, lesser is the chance of recovery and as per

industry practices and RBI guidelines, such accounts need to be provisioned for losses.

The provisioning amount depends on the product and ageing i.e. DPD the

provisioning is provided as % of Principal Outstanding for each contract.

The provisioning in the books will be separately addressed by Finance Department as

per Provisioning norms and policies defined by them. The provisioning norms

mentioned below will only help Business and Portfolio Team to drive collection team

aggressively and control losses.The provisioning defined as under also termed as

FLOW LOSSES i.e. losses on account of provisioning due to flow of contracts across

DPD.

The provisioning norms for AHF are mentioned below :-

DPD Year Days Total days Prov. %

91 1 st year 365 456 15%

456 2 nd year 365 821 25%

821 3 rd year & 4th year 730 1551 40%

1551 After 4th year 100%

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It will be assumed that for loss on sale after possession, if there is no response

to post sale notice, customer has no intention to pay.

For skip cases, fraud cases, other written off cases, legal notice will be sent to

the customers and customer will be asked to pay the foreclosure value within

15 days from the receipt of notice, otherwise suitable complaint to be filed with

Police under criminal sections of IPC.

In parallel case will be handed over to collection team who will counsel the

customer to pay. The customer will be explained consequences of police action,

legal cases and seriousness of AHF in recovering loss amount. Such agencies

and collection team will also create pressure on reference, co applicant, and

employer. Through such intensive follow up, there is a likelihood that some of

the customer may demonstrate willingness to pay or settle.

Under such circumstances the collection team under the guidance of Loss

recovery cell member will negotiate and arrive at negotiation amount. If loss

recovery cell member feels that this is best possible option, he may recommend

the same to Business Head. Business Head will accord approval for settlement.

For skip cases, collection team will try to trace the whereabouts of customer

through property visit, co-applicant and guarantor visits.

NHB GUIDELINES FOR ENGAGING RECOVERY AGENTS

In view of the rise in the number of adverse reports about questionable practices

resorted to by recovery agents in the recent past, it is felt that there is an urgent need

to review the policy, practice and procedures being followed in the use of recovery

agents by Housing

Finance Companies (HFCs). Accordingly, NHB has decided to issue the following

guidelines for adoption by all HFCs. HFCs, as principals, are responsible for the

actions of their agents. Hence, they should ensure that their agents engaged for

recovery of their dues should strictly adhere to these guidelines and instructions,

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including the Fair Practices Code for HFCs, while engaged in the process of recovery

of dues.

‘Agent’ for the purpose of these guidelines would include agencies engaged by the

HFCs and the agents/ employees of the concerned agencies. It is expected that HFCs

would, in the normal course ensure that their own employees also adhere to the above

guidelines during the loan recovery process.

2. ENGAGEMENT OF RECOVERY AGENTS

HFCs should have a due diligence process in place for engagement of recovery agents,

which should be so structured to cover, among others, individuals involved in the

recovery process. HFCs should also ensure that the agents engaged by them in the

recovery process carry out verification of the antecedents of their employees, which

may include preemployment police verification, as a matter of abundant caution and

HFCs may decide the periodicity at which re-verification of antecedents should be

resorted to.

3. TRAINING OF RECOVERY AGENTS

(i) HFCs should ensure that, among others, the recovery agents are properly trained

to handle with care and sensitivity, their responsibilities, in particular aspects like

hours of calling, privacy of customer information, etc.

(ii) In this context, the Reserve Bank of India has requested the Indian Banks’

Association to formulate, in consultation with Indian Institute of Banking and Finance

(IIBF), a certificate course for Direct Recovery Agents with minimum 100 hours of

training. Once the above course is introduced by IIBF, HFCs should ensure that over

a period of one year all their Recovery Agents undergo the above training and obtain

the certificate from the above institute. Further, the service providers engaged by

HFCs should also employ only such personnel who have undergone the above

training and obtained the certificate from the IIBF.

(iii) Keeping in view the fact that a large number of agents throughout the country

may have to be trained, other institutes / HFC’s own training colleges may provide

the training to the recovery agents duly ensuring that there is uniformity in the

standards of training.

However, every agent will have to pass the examination conducted by IIBF all over

India.

4. INTIMATING BORROWERS ABOUT RECOVERY AGENTS

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(i) To ensure due notice and appropriate authorization, HFCs should inform the

borrower the details of recovery agency firms / companies while forwarding default

cases to the recovery agency.

(ii) Further, in some of the cases, the borrower might not have received the details

about the recovery agency due to refusal / non-availability / avoidance. To ensure

identification, it would be appropriate if the agent also carries a copy of the notice and

the authorization letter from the HFC along with the identity card issued to him by

the HFC or the agency firm / company. Where the recovery agency is changed by the

HFC during the recovery process, in addition to the HFC notifying the borrower of

the change, the new agent should carry the notice and the authorization letter along

with his identity card.

(iii) The notice and the authorization letter should, among other details, also include

the telephone numbers of the relevant recovery agency. HFCs should ensure that there

is a tape recording of the content / text of the calls made by recovery agents to the

customers, and vice-versa. HFCs may take reasonable precaution such as intimating

the customer that the conversation is being recorded, etc.

(iv) Up to date details of the recovery agency firms /companies engaged by HFCs may

also be posted on the HFC’s website.

5. INCENTIVES TO RECOVERY AGENTS

Stiff targets or high incentives may induce recovery agents to use intimidatory and

questionable methods for recovery of dues. HFCs are, therefore, advised to ensure

that the contracts with the recovery agents do not induce adoption of uncivilised,

unlawful and questionable behaviour or recovery process.

6. METHODS FOLLOWED BY RECOVERY AGENTS

A reference is invited to Paragraph 6 of Circular No. NHB (ND)/DRS/POL-No-

16/2006 dated September 5, 2006 regarding Guidelines on Fair Practices Code for

HFCs. In terms of these guidelines, all the members of the staff or any person

authorised to represent the HFC in collection or/and security repossession should

follow the guidelines set out, such as:

a) Customer 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.

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b) Identity and authority to represent the HFC should be made known to the

customer at the first instance.

c) Customer’s privacy should be respected.

d) Interaction with the customer shall be in a civil manner

e) HFCs’ representatives shall contact customers between 0700 hours and 1900

hours, unless the special circumstances of the customer’s business or occupation

require otherwise.

f) Customer’s request to avoid calls at a particular time or at a particular place shall

be honoured as far as possible.

g) The time and number of calls and contents of conversation sould be documented.

h) All assistance should be given to resolve disputes or differences regarding dues

in a mutually acceptable and in an orderly manner.

i) During visits to customer’s place for dues collection, decency and decorum

should be maintained.

j) Inappropriate occasions such as bereavement in the family or such other

calamitous occasions should be avoided for making calls /visits to collect dues.

7. TAKING POSSESSION OF PROPERTY MORTGAGED TO HFCS

(i) It has been observed by the Hon’ble Supreme Court that we are governed by rule

of law in the country and the recovery of loans or seizure of assets could be done only

through legal means. It is emphasised in this context that HFCs may rely only on legal

remedies available under the relevant statutes while enforcing security interest

without intervention of the Courts. In this context, it may be mentioned that the

Securitisation and Reconstruction of Financial Assets and Enforcement of Security

Interest Act, 2002 (SARFAESI Act) and the Security Interest (Enforcement) Rules, 2002

framed thereunder have laid down well defined procedures not only for enforcing

security interest but also for auctioning the movable and immovable property after

enforcing the security interest.

(ii) Where HFCs have incorporated a re-possession clause in the contract with the

borrower and rely on such re-possession clause for enforcing their rights, they should

ensure that the re-possession clause is legally valid, complies with the provisions of

the Indian Contract Act in letter and spirit, and ensure that such repossession clause

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is clearly brought to the notice of the borrower at the time of execution of the contract.

The terms and conditions of the contract should be strictly in terms of the disclosed

Recovery Policy and should contain provisions regarding (a) notice period before

taking possession (b) circumstances under which the notice period can be waived (c)

the procedure for taking possession of the security

(d) a provision regarding final chance to be given to the borrower for repayment of

loan before the sale / auction of the property (e) the procedure for giving repossession

to the borrower and (f) the procedure for sale/auction of the property.

8. USE OF FORUM OF LOK ADALATS

The Honourable Supreme Court has also observed, inter alia, that loans, personal

loans, credit card loans and housing loans with less than Rs.10 lakhs can be referred

to Lok Adalats. HFCs are encouraged to use the forum of Lok Adalats for recovery of

housing loans with less than Rs.10 lakh as suggested by the Honourable Supreme

Court.

9. UTILISATION OF CREDIT COUNSELLORS

HFCs should have in place an appropriate mechanism to utilise the services of credit

counsellors for providing suitable counselling to the borrowers where they become

aware that the case of a particular borrower deserves sympathetic consideration.

10. COMPLAINTS AGAINST THE HFC / ITS RECOVERY AGENTS

(i) Complaints received by NHB regarding violation of the above guidelines and

adoption of abusive practices followed by recovery agents of HFCs would be viewed

seriously. Supervisory action could be attracted when the High Courts or the Supreme

Court pass strictures or impose penalties against any HFC or its Directors/ Officers/

agents with regard to policy, practice and procedure related to the recovery process.

(ii) Where a grievance/complaint has been lodged, HFCs should not forward cases to

recovery agencies till they have finally disposed of any grievance/complaint lodged

by the concerned borrower. However, where the HFC is convinced, with appropriate

proof, that the borrower is continuously making frivolous / vexatious complaints, it

may continue with the recovery proceedings through the Recovery Agents even if a

grievance/complaint is pending with them. In cases where the subject matter of the

borrower’s dues might be subjudice, HFCs should exercise utmost caution, as

appropriate, in referring the matter to the recovery agencies, depending on the

circumstances.

(iii) Each HFC should have a mechanism whereby the borrowers' grievances with

regard to the recovery process can be addressed. The details of the mechanism should

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also be furnished to the borrower while advising the details of the recovery agency as

at item. (iii) above.

11. PERIODICAL REVIEW, MONITORING AND CONTROL

HFCs engaging recovery agents are advised to undertake a periodical review of the

mechanism to learn from experience, to effect improvements, and to bring to the

notice of the NHB suggestions for improvement in the guidelines.

12. GENERAL

1. HFCs should, at least on an annual basis, review the financial and operational

condition of the service providers to assess their ability to continue to meet their

outsourcing obligations. Such due diligence reviews, which can be based on all

available information about the service provider should highlight any deterioration

or breach in performance standards, confidentiality and security, and in business

continuity preparedness.

2. HFCs should have in place a management structure to monitor and control its

outsourcing activities. It should ensure that outsourcing agreements with the service

providers contain provisions to address their monitoring and control of outsourced

activities.

3. Regular audits by either the internal auditors or external auditors of the HFC should

assess the adequacy of the risk management practices adopted in overseeing and

managing the outsourcing arrangement, the HFC’s compliance with its risk

management framework and the requirements of these guidelines.

4. In the event of termination of the agreement for any reason, this should be

publicized so as to ensure that the customers do not continue to deal with that service

provider.

5. HFCs should constitute a Grievance Redressal Machinery within the company and

give wide publicity about it through electronic and print media. The name and contact

number of designated grievance redressal officer of the HFC should be made known

and widely publicised. The designated officer should ensure that genuine grievances

of customers are redressed promptly without involving delay. It should be clearly

indicated that HFC’s Grievance Redressal Machinery will also deal with the issue

relating to services provided by the outsourced agency.

5.1 Generally, a time limit of 30 days may be given to the customers for preferring

their complaints / grievances. The grievance redressal procedure of the HFC and the

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time frame fixed for responding to the complaints should be placed on the HFC’s

website.

COLLECTIONS POLICY - ART Housing Finance …...1 RAHFL/COLLECTION/22ND SEPTEMBER/VER2.0 COLLECTIONS...

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Transcript of COLLECTIONS POLICY - ART Housing Finance …...1 RAHFL/COLLECTION/22ND SEPTEMBER/VER2.0 COLLECTIONS...