LOAN POLICY – AHALIA MONEY EXCHANGE AND FINANCIAL SERVICES PRIVATE LIMITED

INTRODUCTION

It is vitally important to frame the loan policy of the company to be complied with by all employees , which will be reviewed from time to time and adjusted and revised, as necessary, to better accomplish the broad objectives of the policy, to effectively meet the challenges posed by emerging market conditions, and to conform to changing regulatory and statutory requirements. The company was registered in 2010 and started full-fledged operations in 2011.Operations were done complying with RBI guidelines and various instructions and clarifications were given from time to time. Now it is felt necessary that a policy should be made available to all concerned explaining the policy. Practice and compliance followed by the company to ensure transparency in our value based business activities

BROAD POLICY OBJECTIVES.

• Contribute to the company’s profitability by efficient and profitable utilization of a prudent proportion of the resources through an expanding loan portfolio;
• Maintain a reasonably balanced portfolio through diversification of credit risks ensuring that the returns commensurate with the risks undertaken; and ensuring that the loan portfolio is of a high quality as would help optimise returns from the portfolio, yielding a satisfactory spread over funding costs and overheads;
• Adopt appropriate risk mitigating steps in processing and approval of loans to contain and control the risks involved mainly credit risk, market risk, operational risk and reputational risk.
• Adhere to the statutory and regulatory requirements ensuring good ethics and transparency in the business activities.

POLICY FOR LOAN AGAINST GOLD JEWELLERY

Gold loan market is an evergreen area in each nook and corner of Kerala offering huge potential for NBFCs for conducting business in a fair manner in spite of the aggressive competition prevailing.

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

Tenure of The Loan: All gold loans are sanctioned for a maximum tenor of 6 months unless otherwise specified under a particular scheme.Company offers gold loans under various schemes including Super Saver Gold Loan, HNI Gold Loans, Privilege Gold Loan, Ahalia Delight Gold Loan, Ahalia Regular Gold Loan etc. Each scheme is having different loan tenure, minimum and maximum loan amount, mode of payment and Interest rate.

Eligible customer: Any individual who is the lawful owner of the Gold Jewellery offered as security as per the declaration of ownership submitted by him and fulfilling the KYC norms as per RBI guidelines.

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.

Quantum of finance: Quantum of finance will be decided on the basis of net weight of gold of 22 carat ornaments tendered as security, its purity and subject to RBI guidelines issued from time to time regarding loan to value.

Minimum loan amount per pledge: Minimum amount of loan per pledge would be Rs.2000/- subject to the conditions that a) minimum weight of gold offered for pledge should be 1 gram (net weight).The minimum loan amount per pledge changes with the schemes of Gold Loan.

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.

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. The interest rates shall be decided based on the cost of funds, and also gradation of risk, the underlying principle being higher the risk higher the interest, within the ceiling rate decided by the Company. 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 for the actual number of days the loan remains outstanding from the date of loan disbursement to the date of closure. However, if the borrower closes the loan within 7 days from the date of disbursement, then a minimum interest for 7 days shall be payable. If the amount of interest so calculated is less than Rs.25/- then a minimum interest of Rs.25/- will be charged. A rebate in interest rate may be provided for encouraging timely repayment of interest or closure of the loan on or before the specified tenor as per different slabs built into each scheme.

For the purpose of calculation of interest, a year will be reckoned as 365 days. Interest will be calculated on monthly compounding basis. 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 grace period.

 

Penal interest: In the event of failure on the part of the borrower to repay the loan along with interest and other charges on the due date or within the grace period permitted, penal interest as decided by the Company from time to time and intimated to the borrower upfront shall be charged over and above the regular interest for the period the loan remains outstanding over and above the due date.

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.

Identity Proof: Passport/PAN/Driving License/Voter ID card/ Aadhar Card or any other identity card issued by a government authority

Address proof: If any of the documents taken as identity proof also contains the address of the borrower, no separate address proof will be insisted upon.

Jewellery Handling: Gross weight of the jewellery 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 jewellery offered for pledge is of an acceptable level of purity.The company also relied in purity analyzer machine installed in all branches.

Net weight of the jewellery to be arrived at after deducting the weight of stones embedded in the ornament completely disregarding the value of such stones. Gold pledged kept in tamper proof sealed pouches after appraisal by auditor in strong safe under double lock (operated by 2 joint custodians) to prevent foul play.Separate packets to be prepared for each loan.

Ownership of gold: Before disbursement of the loan, branch executives should enquire with the customers about the ownership of the jewellery 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 authenticated information regarding ownership of gold jewellery offered as security for the loan are collected from the customers.

Where the gold jewellery pledged by a borrower at any one time or cumulatively on loan outstanding is more than 20 grams, NBFCs shall keep a record of the verification of the ownership of the jewellery. The ownership verification need not necessarily be through original receipts for the jewellery pledged but a suitable document shall be prepared to explain how the ownership of the jewellery has been determined, particularly in each and every case where the gold jewellery pledged by a borrower at any one time or cumulatively on loan outstanding is more than 20 grams.

Only gold jewellery of 22 carat will be accepted as security for the loan. However, in case the purity of the jewellery is found to be less than 22 carat, 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.
 

Loan to Value: The ceiling rate for granting the loan conforming to the guidelines issued by RBI from time to time as also the rate per gram under each scheme shall be centrally updated to branches periodically.
Change in rate of interest and schemes will also be updated in the same manner and intimated to branches periodically from Head Office.

 

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

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.

Sanctioning the loan at a reduced rate of LTV

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 the Company may decide to insure against.

The adequacy of the safety measures put in place as also the insurance cover shall be reviewed on an ongoing basis.

Items not to be considered for accepting as security for the loan:

Melted bar /Primary Gold

Item specified by the Company in the negative list updated from time to time.

Items where the borrower is unable to give a proof or declaration of ownership.

Items which are not permitted to be taken as security by RBI

Release of Jewellery: Jewellery shall be released to the same customer 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 jewellery.

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.

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.

Spurious Gold/Stolen gold on finding Spurious or stolen gold pledge attempt, following steps shall be taken by the branch
Attempt by any suspicious customer trying to pledge stolen /spurious jewellery should immediately be reported to the head office at Kochi and to the local police.

Inspection: All Branches will be periodically inspected and audited by internal audit staff at intervals specified by the Company. 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.

Penal Interest: Company has transperent penal interests provisions for defaulted accounts. Penal interest as applicable to each loan scheme is displayed (refer to our services-easy loans- schemes). Further penal interests are calculated only for the defaulted amount and for defaulted period only. Penal interest provisions are clearly mentioned in the loan document provided to the customer.

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 day’s 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. The company, 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 arms 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.

Auction (a) The auction shall be conducted in the same town or taluka in which the branch that has extended the loan is located. NBFCs can however pool gold jewellery from different branches in a district and auction it at any location within the district, subject to meeting the following conditions: (i) The first auction has failed. (ii) The NBFC shall ensure that all other requirements of the extant directions regarding auction (prior notice, reserve price, arms-length relationship, disclosures, etc.) are met. Non-adherence to the above conditions will attract strict enforcement action. (b) While auctioning the gold the NBFC must declare a reserve price for the pledged ornaments. The reserve price for the pledged ornaments shall not be less than 85 per cent of the previous 30 day average closing price of 22 carat gold as declared by the Bombay Bullion Association Ltd. (BBA) or the historical spot gold price data publicly disseminated by a commodity exchange regulated by the Forward Markets Commission and value of the jewellery of lower purity in terms of carats shall be proportionately reduced.

It shall be mandatory on the part of the NBFCs to provide full details of the value fetched in the auction and the outstanding dues adjusted and any amount over and above the loan outstanding shall be payable to the borrower.

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.

 

Auction Procedure: Procedure as outlined in the auction policy approved by the Board to be followed.

 

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.

LOANS OTHER THAN GOLD LOAN

The Company may grant both secured and unsecured loans to individuals, Companies, firms, trusts and other entities as per the emerging business needs.
In case the loans are given without any primary/collateral security, like unsecured personal loans and consumer goods loan, 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 jewellery as collateral security will be subject to the maximum exposure limit. 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.

At present the company is offering following loans other than gold loans:-

• Ahalia Loan against property
• Ahalia Business Loan
• Ahalia public personal loan
• Ahalia SME Loan
• Ahalia Consumer goods loan - unsecured
• Ahalia secured consumer goods loan

AHALIA LOAN AGAINST PROPERTY(ALAP)

A loan against property(LAP) is a secured loan that is sanctioned keeping an asset as mortgage with the lender. This asset can either be an owned land, a house, or any other commercial premises. The asset remains as collateral with the lender until the entire loan against property amount is repaid.

SALIENT FEATURES OF THE SCHEME

Name	Ahalia Loan against property - ALAP
Security	Owned and occupied landed property of the borrower or spouse
Amount	Upto Rs1 Crores
Period	Upto 5 years.
Repayment	As EMIs
Interest	19.75% - Monthly compounding
Processing fee	1% subject to minimum of Rs 2500/-
Penal Interest	3% on defaulted EMIs and the loan amount outstanding  beyond the due date of the loan
Other charges	Valuation fee, Legal scrutiny charges and insurance charges to be borne by the borrower.

 

The loan amount is fixed strictly bases on the personal income with valid reliable income proof of the borrower and spouse who has to join the loan documents as a co-obligant. Existing repayment obligations and deductions should be deducted from the gross income to arrive at the net monthly income. Afterwards the loan amount is fixed so as to limit the EMI within 50% of the net monthly income. Moreover the loan amount is limited to 50% of the value of security. Details of income proof are given in the scheme details.

 

DOCUMENTATION REQUIREMENT

 

• Loan application duly filled with photographs of applicant and co-obligant.
• KYC documents (AADHAR&PANCARD). Original to be verified and attested by the applicant and BH.
• Financial statement of applicant and co-obligant.
• Details of income proof as shown in the scheme details. Original to be verified and copies self attested and attested by the BH.
• Copies of pass book or statement of bank account (last 6 months)
• Original tittle deed of the property offered as security.
• Prior deeds of the tittle deeds(Upto30 years)
• Land tax receipt.
• Building tax receipt (if building is present in the property)
• Possession certificate from village officer certifying the nature of land, non-attachment and non-excess land.
• Encumbrance certificate from SRO for the last 30 years.
• Location Sketch from Village Officer
• If the applicant is a business man or self employed last 3 years audited balance sheet and Income Tax Receipt should be obtained.
• Valuation report and legal scrutiny report should be obtained in co-ordination with applicant. Fees for both to be paid by the applicant.

 

On satisfactory completion of the above the following items are to be obtained for sanctioning the loan.

 

Stamp paper for Rs10000/- (against LA) in the name of applicant.

Special Adhesive Stamp for Rs.200/-

Re1/-revenue stamp.

Rs 5/- postal stamp.

1% of Loan Amount as processing fee.

 

Documents to be executed, deposit of tittle deeds to be made and loan to be disbursed by “Account Payee” cheque or direct credit to his bank account.

 

The loan once approved will be disbursed within 2 weeks from the date of acceptance of a duly filled application form.

 

AHALIA BUSINESS LOAN (ABL)

 

The Company launched this product (Ahalia Business Loan - ABL) with the intention of diversifying our lending activities. Since NBFCs are not having easy methods of recovery as available to commercial banks, selection of a good customer is of prime importance. The purpose of the loan is purely business in nature and can be utilized for all business needs of the borrower.  Salient features of the loan are as under

Name	Ahalia Business Loan - ABL
Amount	Minimum Rs 25000 to Maximum up to Rs 1,00,000 (One Lakhs)
Period	104 days
Repayment	Daily Collection
Interest	24% - Monthly compounding
Processing fee	1% of the loan amount + stamp charge 200/-
Penal Interest	3% on defaulted payment and the loan amount outstanding beyond the due date of the loan

 

 All business loans will be sanctioned only for pre existing business

 The loan amount is fixed strictly based on the personal income with valid reliable income proof of the borrower and co-obligant who has to join the loan documents.

DOCUMENTATION REQUIREMENT

• PAN Card – For Company/Firm/Individual
• A copy of any  of the following documents as identity proof:
  1. 5. Aadhaar Card
     5. Passport
     5. Voter's ID Card
     5. PAN Card
     5. Driving License
• A copy of any  of the following documents as address proof
  1. 5. Aadhaar Card
     5. Passport
     5. Voter's ID Card
     5. Driving License

• Bank statement of the previous 1 Year.
• Latest ITR along with computation of income, Balance Sheet and Profit & Loss account for the previous 2 years, after being CA Certified/Audited.
• GST registration copy.
• Other Mandatory Documents [Sole Prop. Declaration Or Certified Copy of Partnership Deed, Insurance copy, Certified true copy of Memorandum & Articles of Association (certified by Director) & Board resolution (Original)].
• If the business premises is rented then he/she is required to provide the rental agreement copy for the same.
• Brief description about the Business.
• The Business should be running for a minimum of 2 years.
• 3 blank cheques of the applicant and 1 blank cheque of the co-obligant.

OTHER REQUIREMENT

• Should have a minimum CIBIL score of 700
• Photos of shop from inner & outside View, Field verification report stating the background details of the customer. The same has to be duly signed and confirmed by the concerned official assigned from Head Office.
• Copy of Land tax receipt of property owned by applicant or Co-obligant.
• An undertaking from the BM confirming the KYC, genuinity and the creditworthiness of the customer.

 

 

 

 

REPAYMENT OPTIONS
Loan Amount	EDI - 104 Days
100000	995/104 DAYS 700/150 DAYS
50000	498
75000	746
30000	298
25000	258

 

All the business loans are granted after due verification by the concerned personnel in head office of the company at Kochi

AHALIA PUBLIC PERSONAL LOAN

The company launched this product (Ahalia Public Personal Loan-APPL) with the intention of diversify lending activities. Since NBFCs are not having easy methods of recovery as available to commercial banks, selection of a good customer is of prime importance. The purpose of the loan is purely personal in nature and can be utilized for all personal/business needs of the borrower.  Salient features of the loan are as under:

Name	Ahalia Public Personal Loan - APPL
Amount	Up to Rs 25,000 (Twenty Five Thousand)
Period	12 Months.
Repayment	As EMIs
Interest	24% -Monthly compounding
Processing fee	Rs.300 (Non-refundable) + stamp charge
Penal Interest	3% on defaulted EMIs and the loan amount outstanding beyond the due date of the loan

 

The loan amount is fixed strictly bases on the personal income with valid reliable income proof of the borrower and guarantor who has to join the loan documents as a co-obligant.

REQUIREMENTS OF THE LOAN

• The loan application shold be duly filled with photographs of applicant.
• The self attested copies of Aadhar card and Pan card is mandatory.
• The company shall charge a processing fee of Rs.300 which is a non-refundable charge.
• The applicant should submit 6 months bank statement.
• The salary slip to be verified and its copies shall be self attested by the applicant and also attested by the BH.
• The applicant should have a minimum salary of Rs15,000 per month
• The applicant should have worked in the present firm for at least 2 years.

OTHER REQUIREMENTS AND FORMALITIES

• There should have a minimum CIBIL score of 700.
• The field verification report stating the background details of the customer. The same has to be duly signed and confirmed by the concerned official assigned from Head Office.
• An undertaking from the BM confirming the KYC, genuinity and the creditworthiness of the customer

    AHALIA SECURED SME LOANS (ASME)

 

      It is decided to launch a new product [Ahalia SME Loan (ASME)] with the intention of diversifying our lending activities. The medium & small enterprises can avail of this facility as their working capital requirements. Details as follows

 

	Name		Ahalia SME Loan (ASME)
	Security		Owned and occupied landed property of the borrower or spouse
	Loan Amount		Minimum 2 Lakhs to maximum 10 Lakhs / Subject to value of the security (Property)
	Period		300 Days / 43 Weeks
	Repayment		As Daily Collection
	Interest		( Flat -10.17% )  19.75% -Monthly compounding
	Processing fee		0.5% of Loan Amount
	Stamp Duty		At  Actual ( Vary subject to loan amount)
	Penal Interest		3% on defaulted EMIs and the loan amount outstanding beyond the due date of the loan
	Other charges		Valuation fee, Encumbrance Certificate Charge, Legal scrutiny charges and insurance Charges to be borne by the borrower.
	HDFC Jeevan Suraksha Insurance Policy		Mandatory
	Target Group		Small & Medium Enterprises
REPAYMENT OPTION
Loan Amount		EDI - 300 Days		EWD – 43 Weeks
200000		722		5050
300000		1084		7575
500000		1806		12625
1000000		3612		25251

 

   DOCUMENTATION REQUIREMENT

 

• The loan application duly filled with photographs of applicant and Co-Applicant.
• The KYC documents (Aadhar and pancard). Originals to be verified and attested by the applicant and BH.
• The financial statement/income proof of applicant to be submitted.
• The copies of passbook/statement of bank account for the last 6 months to be submitted.
• The original title deed of the property offered as security to be submitted.
• The original latest Land tax receipt & Possession Certificate to be submitted.
• The building tax receipt (if building is present in the property) to be submitted.
• The previous deeds up to 30 years to be submitted.
• The original latest location Sketch to be submitted
•  The original encumbrance certificate up to last 15 Years to be submitted.

 

      Documents to be executed, deposit of tittle deeds to be made and loan to be disbursed   by “Account Payee” cheque or direct credit to customer bank account.

 

    CONSUMER GOODS LOANS

 

    This loan is particularly offered for purchasing generators. Salient features of the loan is as follows.

       

Product Name	Consumer Goods Loan-Unsecured
Security of loan	Unsecured
Loan Tenure	6/9/12 months
Minimum and Maximum loan amount	Minimum25,000 and maximum 2,00,000
Mode of payment	Cash/Fund transfer
Interest rate	14% Flat
Interest calculation method	Flat
Penal Charges	INR 500/EMI
Maximum permitted amount of loan	70% of selling price of the product
Loan Processing Fee	500
Stamp Charges	200
Over due and NPA norms	The loan will become overdue after loan period. Subsequently loan will become NPA after completing 3 months from the loan due date. If the EMI is not paid continuously for 3 months, loan may be treated as NPA.

  

   PROCESS TO BE FOLLOWED IN THE BRANCHES

•  The branches of the company makes a tie up with the dealers/distributors of generators whenever there is a requirement for the product from the customer, the dealer/distributor can route the deal through Ahalia for finacing option.
•  Company finance upto 70% of the selling price of the product to the customer.
• Maximum care should be taken at the time of customer profiling and screening as this is an unsecured loan
• Credit worthiness, repayment capacity, nature of business of the customer also should be assessed.
• Customer Segment:- Shop owners, Textile shops, Jewellery shops, Hotels and Bakery shops and all other small scale business entities which are generating regular income.
• A loan agreement should be executed with the customer in the specified format
• Loan amount will be directly transferred to the dealers/distributors bank account from Head Office.

 

DOCUMENTS TO BE COLLECTED

 

• Identity Proof
• Address Proof
• Latest Bank account statement
• One passport size photo
• KYC details of guarantor (Identity Proof, Address proof, Bank Statement and Photo)
• 3 Blank cheque leaf should be collected from applicant
• 1 Blank cheque leaf should be collected from guarantor
• Quotation of the product.

After receiving required documents Head office will verify and approve loan to eligible customers.

  

   AUDIT

A dedicated team is discharging the duties of audit and appraisal of pledged gold ornaments. Our intention is to conduct audit monthly in every branch. Monthly audit reports are given to the branches and audit dept and summary is submitted to the concerned departments. Time given to branches is 0ne month to regularize the inspection irregularities. Concerned department and audit department follow up to get the comments rectified.