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policy

Loan Policy

1.1. Product:

To provide loans to customers against pledge of gold jewellery as collateral security.

1.2. Nomenclature and tenure of the loan

Nomenclature: The loan is given as a demand loan.

Tenure of the loan: All gold loans are sanctioned for a maximum tenor of 12 months unless otherwise specified under a particular scheme.

1.3. Eligible customer

Any individual who is the lawful owner of the Gold Jewelry offered as security as per the declaration of ownership submitted by him and fulfilling the KYC norms as per RBI guidelines as specified in the product note given in Annexure.

1.4. Purposes

The loan can be extended to anyone who is having short term fund requirements like working capital for establishment/ expansion of business activity or meeting personal liquidity requirements or domestic needs including medical expenses etc. Loans shall not be used for any speculative or illegal or unlawful purposes violating the laws of the Country.

1.5. Quantum of finance:

In accordance with the product notes given in Annexure 1.

Aggregate of multiple pledges shall be limited to such amount as may be specified by the Credit Monitoring Officer (CMO) from time to time. Any deviations above such limit shall be normally approved by the CMO and where the aggregate of current outstanding and amount(s) proposed exceeds two times of the specified limit, then deviations shall be recommended by the CMO and approved by the Executive Director.

1.6. Quantum and purity of gold that can be pledged and deductions to be considered

The minimum net weight of gold jewellery that can be considered for pledge is one gram. The ornaments shall be of minimum 22 carat purity. The weight of pearl, diamond, coral or any other stone or foreign material other than gold contained or forming part of the ornament irrespective of its value shall be deducted from the gross weight of the ornaments to arrive at the net weight for calculating the eligible loan amount.

1.7. Interest and charges

Interest and other charges to be levied shall be governed by the Interest Rate Policy adopted by the Board.

The Board, or a committee empowered by the Board shall review the interest rates and other charges periodically and approve necessary revisions as per the business requirements.

Any revision in interest shall only be with prospective effect.

Interest and other charges to be levied on the loan shall be as per the schemes formulated and amended from time to time and as communicated to the customer in the loan agreement.

No loan shall be granted at a rate of interest less than the average cost of funds of the Company without the specific approval of the Board.

The interest shall be calculated in accordance with the Interest Rate Policy adopted by the Board.

However, if the borrower closes the loan within the minimum specified period of the laon, then interest for the specified minimum period or an amount of Rs 100 whichever is higher shall be payable.  In such cases, the borrower will be charged the basic interest rate specified for the loan less any applicable rebates in accordance with the loan agreement subject to a minimum amount of Rs 100 as specified above.

If the due date for payment of interest falls on a Sunday/Holiday, the Company may, at its discretion, allow the borrower to pay interest on the next working day without slab change, treating the intervening Sunday/Holiday as a grace period.

1.8. Penal interest

Penal Interest to be levied shall be governed by the Interest Rate Policy adopted by the Board.

1.9. Other charges

In addition to interest the Company may levy other charges as below. The rate at which such charges are to be levied shall be decided by the Board or a Committee empowered by the Board for fixing interest rates and other charges.

  1. Security Charges
  2. Processing charges
  3. Service Charges
  4. Documentation Charges
  5. Notice Charges
  6. Charges for lost tokens
  7. SMs Charges
  8. Auction expenses
  9. Cheque re-issue charges
  10. Dormancy charges
  11. Part release charges
  12. Transaction charges (under specified schemes)
  13. All charges as decided by the Board or the Committee empowered by the Board which will be intimated to the customer upfront.
  14. Stamp duty will be collected in States where it is mandated as per the Stamp Act/State government directives.
1.10. Documentation
  1. Loan Application
  2. Demand Promissory Note and take delivery letter
  3. Terms and Conditions Letter, which also includes declarations and undertakings by the borrower and acknowledged by him and any other documents that may be specified by the Company.
  4. Consent to obtain Aadhaar details for authentication with UIDAI for “eKYC” purpose.
  5. Any one or more of the following Officially Valid Documents (OVDs) specified by RBI as address/ID proof for completing the KYC of the customer. Required KYC documents are specified in the product notes given in Annexure 1.
1.11. Jewelry Handling
  1. Gross weight of the jewelry to be taken and appraised for assessing the purity. Purity check shall be conducted as per the various methods prescribed by the Company to make sure that the jewelry offered for pledge is of an acceptable level of purity.
  2. Net weight of the jewelry to be arrived at after deducting the weight of stones embedded in the ornament completely disregarding the value of such stones. Appraiser to sign the appraisal form as proof of having done the appraisal. Where the process is automated, the approval on the software application will be regarded as a physical signature.
  3. Jewelry to be packed securely along with the weight slip and kept in the strong room/safe.
  4. Separate packets shall be prepared for each loan.
1.12. Ownership of gold

Before disbursement of the loan, branch executives should enquire with the customers about the ownership of the jewelry being pledged for loan and the loan should be granted only after they are convinced about the genuineness of the ownership of the gold ornaments by the borrower and his capacity to own that much quantity of gold. Related authenticanting information regarding ownership of gold jewelry offered as security for the loan may be collected from the customers at the discretion of the branch personnel.
In cases where the weight of the gold jewellery pledged by a borrower at any one time or cumulatively for various loans outstanding in his name is more than 20grams, the declaration should also contain an explanation specifically as to how the ownership was vested with the customer(For eg: Inherited, received as gift, purchased etc).

Pledge by third party for raising loans on behalf of the customer will be allowed only on the strength of Notarized Power of Attorney.

1.13. Issuance of Certificate of Purity

A certificate of purity of the gold jewelry pledged as security for the loan will be incorporated in the Sanction Letter given to the borrower for the limited purpose of determining the maximum permissible loan and arriving at the reserve price for auction.
Only gold jewelry of 22 carats will be accepted as security for the loan. However, in case the purity of the jewelry is found to be less than 22 carats, an option can be exercised by the Company, at its discretion, to translate the weight of the gold by converting it into proportionate weight of 22 carat gold and state the exact grams of the gold available as security accordingly.
Since the purity certificate is issued purely based on the affirmation and declaration given by the borrower and the standard methods of verification adopted by the Company and in the absence of any fool proof method of assessing the purity of gold, no disputes/claims based on the certificate issued in this regard will be entertained by the Company.

1.14. Loan to Value

The ceiling rate for granting the loan will conform to the guidelines issued by RBI from time to time and the rate per gram under each scheme shall be centrally updated in the CBS in a non-editable format and advised to Branches periodically.
Change in rate of interest and schemes will also be updated in the CBS in the same manner and intimated to branches periodically from Head Office

1.15. Renewal of Loans

Renewal of gold loans will be permitted after ensuring sufficient cash flow from the borrower and subject to the following conditions:

  1. The existing loan should be closed by repaying the entire principal and interest up-to-date.

The eligible loan amount for the new loan will be calculated as per the LTV prevailing on the day. Shortfall in the principal amount/interest, if any, will have to be remitted by the borrower

However, there could be instances where the loan proceeds on renewal as per the current LTV will be sufficient to take care of the liability towards closing the existing loan and there may not be any real cash flow. With a view to monitoring such accounts more closely considering the higher risk they pose in a falling gold price scenario, the following options will be examined in the case of such large value loans at the time of sanction.

  1. Sanctioning such loans for a shorter tenure

Sanctioning the loan at a reduced rate of LTV

The overall gold price scenario and the steps taken to mitigate the risk posed due to renewal of accounts without cash flows during the quarter will be discussed in the Risk Management & Audit Committee meetings.

To contain the overall risk arising out of renewal of loans without sufficient cash flows towards closing the earlier loan, the aggregate amount of such renewed loans will be restricted to 40 % of the gold loan portfolio of the Company.

1.16. Digital Transactions

Using rolled out customer apps and customer portals, customers can avail the difference between the loan amount and the eligible loan amount as per the prevailing LTV on any day. In such cases the existing loan will be closed with payment of up-to-date interest and a new loan for the eligible amount as per the LTV applicable for the day will be opened with a new account number. In order to guard against attempts of perpetration of frauds, the difference amount will be credited only to the customer’s registered bank account.

1.17. Safety Measures

Utmost care is to be taken to ensure the safety of the ornaments pledged by the customer. With this in view the following arrangements shall be in place in all the Branches.

  • Strong rooms or FBR safes.
  • Armed guard(s)/watchman at vulnerable branches as decided by the Company.
  • Burglar alarms, Closed Circuit Cameras and such other devices as deemed necessary shall be installed in vulnerable Branches.
  • Insurance cover against burglary/fire/natural calamities or such other risks that the Company may decide to insure against.

The adequacy of the safety measures put in place as well as the insurance cover shall be reviewed on an ongoing basis. An ongoing review of adherence with the conditions or covenants imposed as part of the insurance coverage will also be instituted as appropriate.

1.18. Items not to be considered for accepting as security for the loan.
  • Melted bar /Primary Gold
  • Jewelry of a temple/church or any religious institutions.
  • Item specified by the Company in the negative list that is updated from time to time.
  • Items where the borrower is unable to give satisfactory proof or declaration of ownership.
  • Items which are not permitted to be taken as security by RBI.
  • Jewelry which is not owned by the applicant, for e.g., private financier.
1.19. Release of Jewellery

Jewelry shall be released only to the same customer who has pledged the ornaments on receipt of full dues including the principal, interest, penal interest and other charges, if any. Release, whether partial or in full can be done only after verification of signature, original KYC documents and customer copy of the original pawn ticket (Token). If token is lost indemnity in stamp paper of required value to be obtained before release of jewelry. In case the customer is deceased, the ornament will be delivered to the legal heirs as per the procedure stipulated by the Company for settlement of deceased loan accounts

1.20. Fraud Prevention

All kinds of fraudulent activities or attempt to defraud, whether it is by the employees or outsiders, must be brought to the knowledge of the Management as soon as it is detected for proper action as per company guidelines.

1.21. Spurious Gold/Stolen gold

On finding spurious or stolen gold pledge attempt, the branch shall immediately report the  incident to the Chief Vigilance Officer at Head office,the Vigilance Officer at the Regional Office and through the relevant Territory/Cluster Manager to the local police.

1.22. Inspection

All Branches will be periodically inspected and audited by internal audit staff (including gold inspectors) at intervals as determined by the risk management / internal audit department. The audit department will, at random, verify the quantity and purity of gold ornaments accepted by Branches for pledge. They will also audit various accounting procedures followed at Branches and ensure that the circular instructions issued by the Company from time to time are strictly being adhered to.

1.23. Auction

If the loan account is not closed on completion of tenure and even after sending reminders through SMS, notices / registered notices at frequencies stipulated by the Company, the ornaments will be auctioned after giving a minimum of 14 days’ prior notice by way of an auction notice sent by an authorized auctioneer. The auction will be announced to the public through advertisements published in at least 2 newspapers, one in vernacular language and another in a national daily newspaper. Oleevia Grameen Credits Private Limited, its Group Companies and its other related entities will not be allowed to take part as a bidder in auction to ensure that there is an arm’s length relationship in all transactions during an auction process. The borrower, if he chooses, can participate in the auction process complying with the conditions stipulated by the Company/auctioneer.

The proceeds of auction, net of auction related expenses and incidental charges shall be appropriated towards the loan outstanding. The Company may decide to recover the shortfall, if any, after such appropriation by resorting to various steps including legal action. Excess, if any, shall be refunded to the customer. GST as applicable will be recovered.

1.24. Auction Procedure

The procedure as outlined in the auction policy approved by the Board will be followed.

1.25. Staff Training

All the employees, as soon as they are inducted into the Company shall be trained on methods of assessing the purity of the ornaments. Refresher programme will be conducted to keep them updated.

1.26. Review and Renewal of Gold Loans

Gold Loan portfolio will be reviewed periodically and variation in the value of pledged security according to the prevailing market price of gold vis-à-vis the outstanding liability shall be assessed. During a falling gold price scenario renewal can be permitted at the current LTV with remittance of the interest/ principal due if any or without any inflow of interest/ principal subject to pledge of additional gold to cover the renewal at current LTV.

During an increasing Gold price scenario, the customers will be eligible for higher loan amount and customers may seek for renewal of the loan at the current LTV to avail additional loan on existing pledge. Though no specific additional risk is involved in such renewals at current LTV, such renewals without cash inflow for interest needs to be monitored separately to mitigate the risk in the event of a future fall in gold price. Such renewals shall be done under a special scheme and a suitable threshold limit for such renewals also shall be fixed as a risk mitigation strategy. Gold loan portfolio under the special scheme should always be within 40% of the total Gold loan portfolio of the Company.

  1. The Company may grant both secured and unsecured loans to individuals, Companies, firms, trusts and other entities as per the emerging business needs.
  2. In case the loans are given without any primary/collateral security, like unsecured personal loans and other clean loans, more than ordinary care will be taken to see that such loans are granted only to persons/firms/Companies of repute with credit worthiness and track record. Any lending other than against the pledge of gold jewelry as collateral security will be subject to the maximum exposure limit of the net owned funds of Oleevia Grameen Credits Private Limited as may be defined by the Risk & Audit Committee from time to time. The rate of interest will be decided on a case-to-case basis taking into account various factors like the cost of funds, operational expenses, risk attached to the advance etc but will be subject to the ceiling on the maximum interest rate chargeable as per the Fair Practices Code of the Company.
  3. The Company may outsource some of the activities connected with such loans like sourcing of loan applications/KYC verification/ dues collection etc. In such cases, agencies will be empanelled only after they are subjected to a due diligence process and after entering into an agreement with them complying with the conditions stipulated in the Board approved Outsourcing Policy.
  4. The outsourcing agencies will be subjected to regular review and periodical audits by the Company’s internal auditors to ensure that they are complying with the mandatory requirements under Labour laws and other applicable regulations and the terms and conditions of the agreement entered into with the Company are being followed
  5. The Company may also grant secured and unsecured loans to its employees and employees of its group companies in accordance with their eligibility and other terms and conditions fixed from time to time.
3.1. Products

Personal loans will normally be granted to individuals only after the Company is satisfied about the credit worthiness, integrity, local standing and repayment capacity of each borrower.
As a general rule unsecured personal loan will not be granted to any person who does not have regular verifiable income. Detailed product notes for each personal loan product will be prepared and presented in annexures to this policy.

3.2. Personal loans to salaried persons

Personal loans will be extended mainly to salaried employees of Public Sector units andother reputed institutions.. All other individuals who are willing to provide 100% collateral security in the form of NSCs, RBI bonds, LIC policies, or any other tangible security will also be eligible to avail personal loans.

3.3. Personal loans to self employed persons

Loans may be granted to self-employed individuals who has regular verifiable income which may be ascertained using IT returns, GST returns and/or other alternate means of verification.v

3.4. Personal Loans to individuals other than salaried persons

Considering the opportunities available for lending to the above segment, instruments available to measure and mitigate risks, lending to non – salaried segment also can be made. CIBIL score and data scrub on our existing customers by reputed credit information agencies like CRIF High Marks may be used to identify potential customers in this segment with excellent track record and very low / low credit risk profile. Prospective customers identified by Fintech companies through their digital marketing platform can also be considered for financing subject to fulfilment of the eligibility criteria stipulated by the Company for granting unsecured loans

3.5. Personal Loans to Employees

Employees of Oleevia Grameen Credits Private Limited and all other Divisions of the Oleevia Group at terms and criteria approved by the Board of Directors or by a committee to whom the Board has delegated its powers in this regard. Such terms and criteria will include but not limited to:

  • Minimum service period with the Group;
  • Maximum tenure;
  • Rate of interest;
  • Number of times such loans can be availed within a prescribed period.

The terms and criteria will be as approved by the Board from time to time.

3.6. Loans to SME segment

The Company may extend financial assistance to SME segment directly or through arrangements with other financial entities like FINTECH Companies or banks for co-lending. The loans can be granted either in the form of Working Capital or Term Loan. Any scheme for lending to this segment will need the prior approval of the Board.

3.7. Loan to Traders and Self- Employed

Many of our customers availing gold loans belong to traders and self – employed category. With a view to attract such customers and to retain them with us, loans can be granted to them based on their income earning and repayment capacity duly backed by a good credit history as revealed by their credit bureau reports. A credit appraisal based on formal or informal income will be used to decide on eligibility of a loan applicant. Additional credit risk mitigants such as co-obligancy by the applicant’s spouse or close relative will also be considered.

3.8. Sourcing and Recovery

Sourcing and recovery shall be by Oleevia Grameen Credits branches. If found necessary services of outside agencies can be availed.

Asset classification and income recognition in case of all loans sanctioned under the various schemes formulated to cater to different segments, will be as per the norms prescribed by Reserve Bank of India from time to time.

The Company may, with a view to augmenting its non-fund based income, enter into arrangements with any Company or entity for selling Insurance, Mutual fund or any other products, strictly within the norms prescribed by the regulators in the respective area and those stipulated by Reserve Bank of India from time to time.

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