What is a Non-Banking Financial Company (NBFC)?

Non-banking financial companies (NBFCs) are financial institutions that offer various banking services, but do not have a banking license. NBFCs can offer banking services such as loans and credit facilities, retirement planning, money markets, underwriting and merger activities.

Is Non-Banking Financial Company (NBFC) similar to Bank?

NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:
  • NBFC cannot accept demand deposits.
  • NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.
  • Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.


Interest Rate Model Policy

Reserve Bank of India Vide its Notification No. DNMS.204 / CGN (ASR)-2009 dated January 2, 2009 has directed that the Board of each NBFC shall approve an Interest rate model for the Company, taking in to account relevant factors such as cost of funds, margin and risk premium, etc. and determine the rate of interest to be charged for loans and advances.

Further, the directives states that the rate of interest and the approach for gradation of risk and the rationale for charging different rates of interest for different category of borrowers should be communicated to the burrowers / customers in the sanction letters to them. The Interest rate model is also required to be made available on the website of the Company so as to enable the customers to understand the logic and methodology of the lending rates charged to them.

In compliance with the said RBI directives, the Interest rate model for the Company is given below:

Any revision in the Company’s interest rated applicable to business would be reviewed by the Board.

Fair Practice Code Preamble

The Fair Practices Code (“FPC”) has been devised by Kaunshya Investments Private Limited (“Kaunshya Capital” or “Company”) in accordance with guidelines issued by The Reserve Bank vide its circular dated September 28, 2006 and subsequent amendments, on Fair Practices Code (FPC) for all NBFCs to be adopted by them while doing lending business. The guidelines inter alia, covered general principles on adequate disclosures on the terms and conditions of a loan and adopting a non-coercive recovery method.

Kaunshya Capital has put in place the FPC with an endeavor to achieve synchronization of best practices when the Company is dealing with its stakeholders such as investor, lendors, customers, employees, vendors, etc. The Company’s Fair lending practices shall apply across all aspects of its operations including marketing, loan origination, processing, and servicing and collection activities. Kaunshya Capital’s commitment to the FPC would be demonstrated in terms of employee accountability, monitoring and auditing programs, training and technology.

The Company’s Board of Directors and the management are responsible for establishing practices designed to ensure that its operations reflect a strong commitment to fair lending and that all employees are aware of that commitment.

    “Board” means Board of Directors of the Company.
    “Company” means Kaunshya Investments Private Limited.
    “Directors” means individual Director or Directors on the Board of the Company.
    “FPC” means Fair Practice Code

Key Commitment

The essence of the FPC lies in the following aspects that Kaunshya Capital shall strive to follow in spirit and in letter:

To provide professional, efficient, courteous, diligent and speedy services.

i. Not to discriminate on the basis of religion, caste, sex, descent in any manner.
ii. To be fair and honest in any advertisement and marketing of loan products.
iii. To provide customers with accurate and timely disclosure of terms, costs, rights and liabilities as regards loan transactions.
iv. If sought, to provide such assistance or advise to customers seeking loans.
v. To attempt in good faith to resolve any disputes or differences with customers by setting up complaint redressal system within the organization.
vi. To comply with all the regulatory requirements in good faith.
vii. Seek to use governance structures that provide appropriate levels of oversight in the areas of audit, risk management and potential conflicts of interest and to implement compensation and other policies that align the interests of owners and management.
viii. Seek to confirm that the funds do not flow to companies that utilize child or forced labor or generally maintain discriminatory policies against religion or gender.
ix. Ensure compliances relating to Indian regulations prescribed by the Reserve Bank of India (‘RBI’)

Grievance Redressal Policy

The policy aims to minimize the instances of customer complaints through proper service delivery and review mechanism and to ensure prompt redressal of customer grievances.
Internal procedures

    If you want to make a complaint, we will tell you
        How to do so.
        Where a complaint can be made.
        Where a complaint can be made.
        When to expect a reply.
        Whom to approach for redressal.
        What to do if you are not satisfied about the outcome.
    Our staff will help you with any questions you have.
    We will tell you where to find details of our procedure for handling complaints fairly and quickly.
    If your complaint has been received in writing, we will make sure to send you an acknowledgement/ a response within a week through letter/mail. If your complaint is relayed over phone at our designated telephone helpdesk or customer service number, we shall provide you a complaint reference number and keep you informed of the progress within a reasonable period of time.
    After examining the matter, we will send you our final response within 30 days of the receipt of your complaint and will tell you how to take your complaint further if you are still not satisfied.
    Within 30 days of lodging a complaint with us, if you do not get a satisfactory response from us and you wish to pursue other avenues for redressal of grievances, you may approach the Officer-in-Charge of the regional office of the department of Non-Banking supervision of RBI.

Kaunshya Investments Private Limited (Kaunshya Capital) aims to provide the best customer service possible and is consistently striving on creating a robust and efficient customer service platform. We at Kaunshya Capital aim to delight our customers with our services. Considering customer profile, their literacy level and vulnerability, Kaunshya Capital has identified various channels of sourcing customer complaints proactively:

Level 1
Email: You can write to the following email ID as well: customersupport@kaunshya.com.

Postal/courier: You can also send your queries through post/courier to Kaunshya Investments Private Limited, No.10/1, Lakshmi Narayana Complex, 4th floor, Palace Road, Bangalore-560 052.

Level 2
If the resolution you receive from the above is not to your satisfaction, please write to our Rajshekhar@kaunshya.com

Level 3
If you are still dissatisfied with the resolution you receive, you may write to bharathbhushan@kaunshya.com

Level 4
If you are still dissatisfied with the resolution you receive from above, you may further write to Suresh@kaunshya.com

If the complaint / dispute is not redressed by KIPL within a period of one month, you may appeal to the:
Office -in – Charge
Regional Office, DNBS
Reserve Bank of India
10/3/8, Nrupatunga Road
Bangalore – 560 001

Principles for determining interest rate for loans

Kaunshya Investments Private limited (Kaunshya Capital or Company) has its own model for arriving at interest rates taking into consideration among other things Kaunshya Capital’s weighted average cost of funds, un-allocable overheads and other administrative costs which is further adjusted for ALM mismatch. The weighted average cost of funds is computed taking into account the cost of KIPL aggregate borrowings at the month end time from various sources such as bank, NBFC lines, non- convertible debentures, etc.
  • The said rate is reviewed in the Board Meeting.
  • The rate of interest for loans for various schemes thereunder is arrived at through Kaunshya Capital’s interest rate model, cost on account of risk and tenor premium for the concerned business segment, business specific operating cost and margin is added to arrive at the lending rate.
  • The final lending rate for various products offered by Kaunshya Capital will be arrived at after taking into account market reputation, interest, credit and default risk in the related business segment, historical performance of similar homogeneous clients, profile of the borrower, tenure of relationship with the borrower, repayment track record of the borrower in case of existing customer, subventions available, deviations permitted, future potential, group strength, overall customer yield, nature and value of primary and collateral security, etc. Such information is gathered based on information provided by the borrower, credit reports, market intelligence and information gathered by field inspection of the borrower’s premises.
  • The rate of interest for the same product and tenor availed during same period by different customer need not to be standardized. It could vary for different customers depending upon consideration of any or combination of above factors.
  • The interest rates could be offered on fixed or variable basis and charged either on flat or reducing balance method.
  • For the above interest range could vary between ten and forty percent.
  • The interest could be charges on weekly/fortnightly/monthly/quarterly rests for different products / segments.
  • Interest rates / interest type would be intimated to the customers at the time of sanction / availing of the loan and EMI apportionment towards interest and principal dues would be made available to the customer.
  • The interest shall be deemed payable immediately on the due date as communicated and no grace period for payment of interest is allowed.
  • Besides normal interest, the company may levy additional / penal interest for delay default in making payments of any dues. These additional or penal interests for different products or facilities would be decided by the respective business / product heads.
  • Changes in the interest rated and charges would be prospective in effect and intimation of change of interest or other charges would be communicated to customers in a mode and the manner deemed fit.
  • Besides Interest, other financial charges like processing fees, origination fees, cheque bouncing charges, late payment charges, re-scheduling charges, pre-payment / foreclosure charges, part disbursement charges, cheque swap charges, security swap charges for issue of statement account etc., would be levied by the company wherever considered necessary. Besides these charges, stamp duty, GST and other cess would be collected at applicable rates from time to time as communicated in the documentation provided. Any revision in these charges would be have a prospective effect and will be communicated with the borrower.
  • While deciding the charges, the practices followed by the competitors in the market would also be taken into consideration.
  • Claims for refund or waiver of charges / penal interest / additional interest would normally not be entertained by the company and it is the sole discretion of the company to deal with such requests.
  • Any revision in the Company’s interest rated applicable to business would be reviewed by the Board.

Guidelines on Fair Practice Code For Kaunshya Capital Applications for loans and their processing

– All loan products of the company shall be the same as mentioned in the Loan policy of the company.

– All communications to the customer by Kaunshya Capital shall be in English as it is understood by all customers of Kaunshya Capital.

– As part of the loan process, to inter alia ensure utmost transparency, Kaunshya Capital provides all necessary information to the customer along with the term sheet/application/proposal as the case may be including but not restricted to nature of security required ,fees/charges, if any, payable for processing, the non-refundable nature of fees including in the case of non-acceptance of loan proposal, pre-payment options, check list in respect of information/papers required for considering loan and any other matter which effects the interest of the customer so that a meaningful comparison with the terms and conditions offered by other Non-Banking Financial Companies (‘NBFCs’) can be made and informed decision can be taken by the customer.

– Time-period for disposal of application – For all categories of customers and for any amount of Loans, the Time norms for disposal after Submission of all required papers / information sought by the Kaunshya Capital shall be upto 60 days or such time as mutually agreed upon with customer.

– On exercise of choice, the customer would be given the relevant information about the loan product of its choice.

– The customer would be explained the processes involved till sanction and disbursement of loan and would be notified of timeframe within which all the processes will be completed ordinarily.

ii. Loan appraisal terms and conditions

– Kaunshya Capital shall scrutinize the information submitted by the customer and additional data, if any, required should be called promptly to facilitate expeditious disposal of the loan.

– Kaunshya Capital shall convey in writing in English as it is understood by all customers of Kaunshya Capital by means of Sanction letter or Term sheet or any other form of written communication key terms and conditions of the proposed exposure including:

a) the amount of loan sanctioned along with the terms and conditions including annualized rate of interest,

b) details of the default interest / penal interest rates (expressed in percentage per month / annum as the case may be) and the charges payable by the customers in relation to their loan account and method of application thereof (penal interest charged for late repayment of loan would be mentioned in bold in the loan agreement)

c) acceptance of terms and conditions and other caveats governing the credit given by Kaunshya Capital arrived at after negotiation

d) terms of enforcement of security

e) all other information which is relevant from the point of view of the loan to be provided and all the parties involved.

f) wherever possible, reasons for rejection of loan would be conveyed to the customers.

– Kaunshya Capital shall furnish a copy of the loan agreement in English as understood by the borrower along with copy of all relevant enclosures quoted in the loan agreement to all the borrowers at the time of sanction/disbursement of the loan and shall be duly approved by the customer and countersigned by the authorized officials of Kaunshya Capital.

iii. Disbursement of loans including changes in terms and conditions

– Kaunshya Capital shall give notice in English as understood by the customer regarding any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc.

– Changes in the interest rates and charges shall be effected prospectively.

– A suitable condition in this regard shall be incorporated in the loan agreement, as applicable.

– Decision to recall / accelerate payment or performance under the agreement should be in consonance with the loan agreement. Before taking a decision to recall / accelerate payment or performance under the agreement or seeking additional securities, Kaunshya Capital shall give notice to customers in consonance with the loan agreement in English as may be understood by the customer.

– Kaunshya Capital shall release all securities on repayment of all dues or on realization of the outstanding amount of loan subject to any legitimate right or lien for any other claim Kaunshya Capital may have against borrower. If such right of set off is to be exercised, the borrower shall be given notice about the same with full about the remaining claims and the conditions under which Kaunshya Capital is entitled to retain the securities till the relevant claim is settled/ paid

– All communication like acceptances (including for amendments or addendum) with the Customer in relation to the sanction / facilities / loan / mandate / proposals shall be in writing and preserved for a minimum period of ten years.

iv. General

– Kaunshya Capital will not interfere in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless information, not earlier disclosed by the borrower, has been noticed).

– In case of receipt of request from the borrower for transfer of loan account, the consent or otherwise i.e. objection from Kaunshya Capital, if any, should be conveyed within 21 days from the date of receipt of request. Such transfer shall be as per transparent contractual terms in consonance with law.

– If the customer does not adhere to repayment schedule, a defined process in accordance with the laws of the land will be followed for recovery of dues. The process will involve reminding the customer by sending the notice or by making personal visits and/ or repossession of security, if any. In case of default, Kaunshya Capital may refer the case to the recovery agent and will inform the customer of the recovery proceedings being initiated. Kaunshya Capital shall ensure that its process of recoveries will not involve harassment to the Customer. Appropriate instructions will be provided by Kaunshya Capital to its staff for handling customer queries and grievances cordially.

– In accordance with circular no. DNBS(PD). CC. No. 399/03.10.42 /2014-15 dated July 14, 2014 issued by RBI to ensure customer protection and to bring in uniformity about prepayment of various loans by borrowers of banks and NBFCs, Kaunshya Capital shall not charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.

– All the fees / charges / interest would be payable as per interest rate policy or as per mutually agreed terms.

– Post disbursement supervision is constructive and the genuine difficulties which the customer may face is given consideration.

– Kaunshya Capital will consider cases of financial difficulty appropriately. The customer should identify problems and immediately should let Kaunshya Capital know as soon as possible.

– All personal information of the customer would be confidential and would not be disclosed to any third party unless agreed to by the customer in writing. The term ‘Third party’ excludes all Law enforcement agencies, Credit Information Bureau, RBI, other banks and financial institutions and any other state, central or other regulatory body.

– Customer information would be revealed only under the following circumstances, namely;

a) If Kaunshya Capital is compelled by law
b) If it is in the Public Interest to reveal the information ➢ If the interest of Kaunshya Capital to require disclosure.

v. Responsibility of Board of Directors

– The Board of Directors of Kaunshya Capital has laid down grievance redressal mechanism within the organization as per details mentioned in the next paragraph. Such a mechanism ensures that all disputes arising out of the decisions of Kaunshya Capital’s functionaries are heard and disposed of at least at the next higher level. The Board of Directors of Kaunshya Capital shall annually review the compliance of the FPC and the functioning of the GRM. A consolidated report of compliance shall be submitted to the Board every year.

vii. Language and mode of communicating FPC

– FPC as established by Kaunshya Capital has been established in English language and is based on the guidelines as outlined by the RBI.

– Kaunshya Capital shall also have its FPC in regional/vernacular languages for customers who are unable to read the same in English.

viii. Regulation of excessive interest rates charged

– Kaunshya Capital will disclose to the borrower the risk and rationale for charging different rate of interest to different categories of borrowers in the application form and explicitly communicated in the sanction letter.

– The rates of interest and approach for gradation of risk shall also be made available on the website of Kaunshya Capital.

– The rate of interest being charged by Kaunshya Capital shall be annualized rate to make the customer aware of the exact rates that would be charged to the account.

ix. Complaints about excessive interest rates charged

Board of Kaunshya Capital shall lay out an interest rate policy mentioning internal principles and procedures in determining interest rates, processing charges and other charges.

Privacy Policy

This website KaunshyaCapital.com (“Website”) is owned and operated by Kaunshya Investments Pvt Ltd (Kaunshya Capital). Kaunshya Capital provides services to the Users through the Website and is committed to protecting and respecting the privacy of the Users.

In the course of using this Website or availing the products and services vide the online application forms and questionnaires, Kaunshya Capital and its affiliates may become privy to the personal information of its Users, including information that is of a confidential nature.

Kaunshya Capital is strongly committed to protecting the privacy of its Users and has taken all necessary and reasonable measures to protect the confidentiality of the User information and its transmission through the World Wide Web. Kaunshya Capital shall not be held liable for disclosure of the confidential information if such disclosure is in accordance with this Privacy Policy (“Policy”) or in accordance with the terms of any agreements entered into with the Users. Kaunshya Capital also assures not to disclose all information that it learns during the transactions and payments made to the User’s account(s).

User(s)” shall mean and include all companies and private organisations that visit the Website and provide information to Kaunshya Capital through any of the modes referred to in the clause on “Collection of Information” below.