Shriram City Union Finance Limited - Karvy

• provisions for bad and doubtful debts; and• provisions for depreciation in investments.Such provisions shall not be appropriated from the general provisions and loss reserves held, ifany, by the NBFC-D and for each year shall be debited to the profit and loss account. The excessof provisions, if any, held under the heads general provisions and loss reserves may be writtenback without making adjustment against them.ix) Monthly Return: Every NBFC with total assets of ` 100 crore and above according to the previous21 days audited balance sheet, is required to submit a monthly return within a period of 7 days ofthe expiry of the month to which it pertains in the prescribed format to the Regional Office of theDepartment of Non-Banking Supervision of the RBI.x) Fair Practices Code: The RBI has framed the fair practice guidelines, to promote good and fairpractices by setting minimum standards to be adhered to by NBFCs in dealing with customers.These guidelines require NBFCs to ensure that they meet the commitments and standardsspecified therein for the products and services they offer and in the procedures and practices theirstaff follows, their products and services meet relevant laws and regulations in letter and spirit,and their dealings with customers rest on ethical principles of integrity and transparency. Further,the said guidelines prescribe the requirements in connection with information to be provided anddisclosures to be made by NBFCs to their customers. Accordingly, the guidelines require NBFCsto provide information on interest rates, common fees and charges, provide clear informationexplaining the key features of their services and products that customers are interested in, provideinformation on any type of product and service offered, that may suit the customer’s needs, tell thecustomers about the various means through which products and services are offered, and providemore information on the key features of the products, including applicable interest rates / fees andcharges.xi) KYC Guidelines: NBFCs have been advised to follow certain customer identification procedurefor opening of accounts and monitoring transactions of suspicious nature for the purpose ofreporting it to appropriate authority, (“KYC Norms”). Accordingly, NBFCs have been advised toensure that a proper policy framework on ‘know your customer’ and anti-money launderingmeasures is formulated and put in place with the approval of the RBI. The KYC Norms alsorequire that while preparing operational guidelines NBFCs may keep in mind to treat theinformation collected from the customer for the purpose of opening of account as confidential andnot divulge any details thereof for cross selling or any other purposes. NBFCs may, therefore,ensure that information sought from the customer is relevant to the perceived risk, is not intrusive,and is in conformity with the guidelines issued in this regard. Any other information from thecustomer should be sought separately with his /her consent and after opening the account.Rating of Financial ProductAs per RBI Circular dated February 4, 2009 all NBFCs with assets size of ` 10,000 lakhs and above isrequired to furnish at the regional office of the RBI under whose jurisdiction the registered office of theNBFC is functioning, information relating to the downgrading and upgrading of assigned rating of anyfinancial products issued by them within 15 days of such change.Norms for excessive interest ratesRBI through its circular dated May 24, 2007 directed all NBFCs to put in place appropriate internalprinciples and procedures in determining interest rates and processing and other charges. In addition to theaforesaid instruction RBI has issued a circular dated January 2, 2009 and a master circular on Fair PracticesCode dated July 1, 2009 for regulating the excessive rates of interest charged by the NBFCs. Theaforementioned circular and the master circular stipulate that the board of each NBFC shall adopt aninterest rate model taking into account the various relevant factors such as cost of funds, margin and riskpremium etc. The rate of interest and the approach for gradation of risk and the rationale for charging179