Collection Policy

Essentials:

Regulatory Compliance: Ensure that the recovery policy complies with the regulatory framework set by the relevant financial authorities. Stay updated with changes in regulations and incorporate them into the policy.

Credit Risk Assessment: Establish a robust credit risk assessment mechanism to evaluate the creditworthiness of borrowers before disbursing loans. This shall include the use of credit scores, financial analysis, and other relevant data.

Early Warning System: Develop an early warning system to identify potential delinquencies. This allows the NBFC to take proactive measures to prevent loans from becoming non-performing.

Loan Classification: Categorize loans into various stages, such as performing, substandard, doubtful, and loss. Define criteria for each stage and the corresponding actions to be taken.

NPA Resolution: Define the process for resolving non-performing assets (NPAs) efficiently. This may involve settling or restructuring debts, selling collateral, or taking legal actions.

Communication: Clearly outline the communication procedures to be followed when dealing with defaulting borrowers, including notifications, reminders, and negotiation tactics.

Legal and Regulatory Aspects: Ensure that the recovery policy adheres to all legal and regulatory requirements for debt recovery, including the Fair Practices Code and the Sarfaesi Act, if applicable.

Recovery Costs: Evaluate the costs associated with recovery efforts and set guidelines for their allocation. This may include legal fees, administrative costs, and provision for bad debts.

Collection Of Dues

It’s essential for a company to provide clear and comprehensive information to the customer about the loan, including the loan amount, tenure, and periodicity of repayments. Transparency in loan terms helps borrowers make informed decisions.

If the customer fails to adhere to the repayment schedule, the company shall follow a defined process in accordance with the laws and regulations of the country. This process should be lawful, respectful, and fair as follow:

Identity and Authority: It’s crucial to make the customer aware of the identity of the representative and their authority to represent the company during the initial contact. This ensures transparency and builds trust.

Civil Interaction: All interactions with the customer shall be conducted in a civil and respectful manner. Courtesy and professionalism shall be maintained throughout the process.

Customer’s Preferences: The company shall honor the customer’s reasonable requests, such as avoiding calls at specific times or locations, whenever possible. This demonstrates a willingness to accommodate the customer’s needs.

Contacting the Customer: The company shall make an effort to contact the customer at a place of their choice. If the customer hasn’t specified a location, attempts shall be made at their residence or, if unavailable, at their place of business or occupation. This shows flexibility and consideration for the customer’s convenience.

Documentation: Keeping records of the time and number of calls, as well as the contents of conversations, is essential for transparency and to have a clear history of communication.

Sensitivity to Occasions: Inappropriate times, such as during family bereavements or calamitous occasions, shall be avoided for making calls or visits to collect dues. This shows empathy and consideration for the customer’s personal circumstances.

Dispute Resolution: The company shall be proactive in assisting customers to resolve disputes or differences regarding dues in a mutually acceptable and orderly manner. This can help prevent escalation and legal action.

Decency and Decorum: During visits to the customer’s place for dues collection, maintaining decency and decorum is crucial. This includes conducting oneself professionally and respectfully.

Respect for Customer’s Privacy: Respecting the customer’s privacy is fundamental. This means not disclosing sensitive financial matters to third parties and being discreet about the purpose of the contact.

Collection Mechanisams

The guidelines related to the Collection mechanisms for loan products offered by PJCCPL are as stated below:

Step 1: Collection via Call

Initially, during the first 30 days starting from the initial of the non-repayment of EMI date, our executives shall remind the Customers to pay the missed EMI and guide them with the Collection Mechanism of the Company. The Officer shall follow up with the overdue clients.

Step 2: Arrangement of Meeting with Customer

After the completion of 30 days, if the dues are not received then the Sales Executive and Branch Manager, if needed (depending on the amount of Loan disbursed) shall fix a meeting 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.

PJCCPL shall also send a Notice issued by the authorised Person via Registered Post reminding the Customer to repay his dues.

Identity and authority of persons authorised to represent bank for follow up and recovery of dues would be made known to the customers at the first instance. PJCCPL staff or any person authorised to represent the bank in collection of dues will identify himself / herself and display the authority letter issued by PJCCPL upon request.

Things kept in mind while Meeting or a Call for Collection:

• Representative is committed to ensure that all written and verbal communication with its customers will be in simple business language and it will adopt civil manners for interaction with customers.
• Normally representatives will contact the customer between 0700 hrs and 1900 hrs, unless the special circumstance of his / her business or occupation requires PJCCPL to contact at a different time.
• Customer’s request to avoid calls at a particular time or at a particular place would be honoured as far as possible.
• PJCCPL will document the efforts made for the recovery of dues and the copies of communication set to customers, if any, will be kept on record.
• Inappropriate occasions such as bereavement in the family or such other calamitous occasions will be avoided for making calls / visits to collect dues.

Step 3: Collection through Agency

During the next 30 Days, PJCCPL shall hire a Collection Agency distinctively if viable with the Loan amount to recover the dues from customer. Collection Agency shall take steps independently for recovery. The process as defined by such Agency shall be necessarily followed when and wherever required.

Step 4:  Giving notice to customers

While written communications, telephonic reminders or visits by PJCCPL’s representatives or Agency to the customers’ place or residence will be used as loan follow up measures, PJCCPL will not initiate any legal or other measures without giving due notice in writing. Any genuine difficulties expressed/ disputes raised by the customer will be considered by PJCCPL before initiating recovery measures. It will follow all such procedures as required under law.

In the final step of Collection Mechanism, PJCCPL shall take legal steps as per Section 138 of The Negotiable Instrument Act, 1881 (as amended from time-to-time), and shall send notice to the customer for recovery.

These guidelines not only ensure that the company is adhering to ethical practices but also help in building a positive image and maintaining long-term customer relationships. Ethical debt collection practices are not only a legal requirement in many jurisdictions but also essential for preserving the reputation and goodwill of the company.