Collections & Recovery Policy

This Policy is framed in accordance with the Reserve Bank of India guidelines, including the Fair Practices Code for NBFCs, and shall be read in conjunction with all applicable RBI circulars, directions and amendments issued from time to time.

The Collections & Recovery Policy of Fair Securities Private Limited (hereinafter referred to as ‘NBFC’”) shall aim at ensuring an effective, fair, and timely recovery process, so that Gross NPA level is maintained as per the risk appetite of the Company.

It is essential for a sound NPA management system to have functionality allowing for quick identification of non-performing advances, their containment at minimum levels and ensuring that their impingement on financials of the Company are minimum.

2. Objectives & Principles

The quality and performances of advances have a direct bearing on the profitability of the NBFC. Despite an efficient credit appraisal, disbursement and monitoring mechanism, problems can still arise due to various factors and give scope for Non-Performing Assets (NPA). These factors may be internal or external.

Key objectives of the policy are:

2.1. The Policy is aimed at strengthening the management and recovery of NPAs and proactive initiatives to closely monitor existing accounts

2.2. The Policy continues to lay stress on the present system of early identification and reporting of all existing and potential problem loans in preventing the incidence of NPAs.

2.3. The Loan Review Mechanism to be triggered on detection of early warning signals to ensure an effective and quicker response for correction

2.4. The Policy emphasizes a broad approach, including critical parameters to be taken into account, towards the collection, recovery and resolution of loans through rehabilitation, compromise settlements etc.

2.5. The Policy aims at improving internal efficiency of the recovery machinery and thus enhance the profitability of the NBFC.

Following are the guiding principles for this policy:

• a. NBFC’s recovery procedure will be based on legal and acceptable practices
• b. NBFC shall treat its defaulters with respect and dignity while being focussed on recovery. NBFC shall ensure that borrowers are treated with dignity, respect, and fairness, and shall not resort to harassment or coercive practices.
• c. NBFC shall follow only ethical practices and not resort to unduly coercive tactics in the process of recovery of NPAs.

3. Policy Review & Approval process

The Policy shall be reviewed annually by the Compliance Department/Recovery Department and placed before the Board of Directors for approval. The minutes of meeting of the committee and the Board would be documented.

4. Key Definitions

Customer

Customer shall mean the Borrower, who borrowed the funds from NBFC

Default

Default is considered to have occurred when an asset is classified as non-performing asset (‘NPA’). All defaults will be recorded in accordance with the reference definition of default detailed in the Credit Risk Management Policy.

Non-Banking Financial Company (“NBFC”)

NBFC shall mean Fair Securities Private Limited.

Non-performing assets

An asset, including a leased asset, becomes non-performing when it ceases to generate income for the NBFC. A "Non-performing Asset" (NPA), a loan or an advance where:

• a. Interest and/or instalment of principal remain overdue for a period of more than 90 days in respect of a Term Loan,
• b. The account remains ‘out of order’, in respect of an Overdraft/Cash Credit (OD/CC),

Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.

Overdue

Any amount due to the NBFC under any credit facility is ‘overdue’ if it is not paid on the due date fixed by the NBFC.

5. Collections

• 5.1. Introduction
• NBFC shall adopt a fair, transparent, and customer-centric approach towards collection and recovery of dues. The recovery process shall be conducted in accordance with RBI guidelines, ensuring that no borrower is subjected to harassment, coercion, or undue pressure. NBFC believes in following fair practices with regard to collection of dues and thereby fostering customer confidence and long-term relationship.
• NBFC shall keep the customer informed of the method of calculation of interest and the mode of repayment will be appropriated against interest and principal due from the customers. NBFC would expect the customers to adhere to the repayment schedule agreed to and approach NBFC for assistance and guidance in case of genuine difficulty in meeting repayment obligations.
• 5.2. Collection Mechanisms
• While written communications, telephonic reminders or visits by NBFC’s representatives to the borrower’s place or residence will be used as loan follow up measures, NBFC shall not initiate any legal or other recovery measures without giving due notice in writing. Any genuine difficulties expressed/ disputes raised by the customer will be considered by NBFC’s before initiating recovery measures.
• The customer would be contacted 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 occupation
• Every recovery agent shall carry:
• • • Valid Identity Card
  • • Authorization Letter
  • • Contact details of NBFC Grievance Officer
• Identity and authority of persons authorised to represent NBFC for follow up and recovery of dues would be made known to the borrowers at the first instance. NBFC’s staff or any person authorised to represent the NBFC in collection of dues and display the authority letter issued by the NBFC upon request.
• NBFC would respect privacy of its borrowers.
• NBFC is committed to ensure that all written and verbal communication with its borrowers will be in simple business language and NBFC will adopt civil manners for interaction with borrowers.
• Normally NBFC’s representatives will contact the borrower between 0800 hrs and 1900 hrs,
• Borrower's request to avoid calls at a particular time or at a particular place would be honoured as far as possible.
• Any deviation shall be only at the specific request or consent of the borrower
• NBFC will document the efforts made for the recovery of dues and the copies of communication sent to customers, if any, will be kept on record.
• All digital communications including SMS, emails, or automated calls shall be factual, non-misleading, non-threatening, and compliant with RBI guidelines
• Inappropriate occasions such as bereavement in the family or such other calamitous occasions will be avoided for making calls / visits to collect dues.
• The NBFC shall maintain records of collection calls, recovery communications, field visits and borrower interactions for audit and regulatory purposes.
• 5.3. Process to be followed for Recovery
• • 5.3.1. Initial Payment Reminder
  • The lender shall first send reminders through text messages or emails or phone calls to give a reminder to remember the payment due date without causing stress or shame.
  • 5.3.2. Notice of Default

  The lender shall send official emails explaining the consequence of the missed payments and possible next steps if payments remain missed. These official communications shall include important details about Principal Amount, Interest and the late fees. The personal loan recovery process must give you reasonable time to respond before taking stronger actions.

  • 5.3.3. Communication regarding the Recovery Agent
  • After serving the Notice of Default, the lender shall inform the borrower by way of Email, SMS or any other mode of communication, the details of the recovery agent assigned to the default loan account.
  • 5.3.4. Recovery Agent contact
  • NBFC shall allocate the case to the recovery agents and they may contact the borrower by phone or in person – following strict rules about timing and behaviour.
  • These agents must identify themselves properly and talk to the borrower respectfully without threats or pressure. The recovery of loan process must protect the privacy and dignity of the borrower.
  • 5.3.5. Negotiation and Resolution
  • If the Borrower shows the interest of making the payment but cannot pay the full amount of repayment, the NBFC shall give the opportunity of settlement of the repayment amount wherein the NBFC holds the right to waive off some amount of Interest levied on the Loan to resolve the loan account as soon as possible.
  • 5.3.6. Initiate the Legal Proceedings
  • NBFC shall initiate legal proceedings only after issuing a prior written notice to the borrower and ensuring compliance with all applicable laws. Thereafter, the lender may commence appropriate legal action for recovery of dues through competent courts or other legal channels. A legal notice must be duly served upon the borrower before filing any case before the concerned court.

6. Recovery Agent Due Diligence & Training

The Company shall ensure that all recovery agents engaged by it undergo appropriate due diligence, including police verification, PAN and Aadhaar verification, and background checks. The Company shall also ensure that such agents receive periodic training on RBI guidelines, customer protection, ethical recovery practices, and execute an undertaking confirming their adherence to the applicable RBI guidelines.

7. Recovery Agent Code of Conduct

The policy should specifically prohibit:

• • Harassment
• • Intimidation
• • Threats
• • Abusive language
• • Physical force
• • Public humiliation
• • Contacting unrelated third parties
• • Social media harassment
• • Publishing borrower details

8. Prohibited Recovery Practices

The Company, its employees, recovery agents, collection agencies, DSAs and LSPs shall not:

• • use abusive language;
• • threaten borrowers;
• • contact borrowers through unauthorized channels;
• • publish borrower details;
• • contact unrelated persons except for location tracing;
• • use physical force;
• • harass borrowers through repeated calls;
• • make misleading representations;
• • impersonate legal authorities or government officials.

9. Borrower Grievance Redressal Mechanism

Borrowers may raise complaints regarding recovery practices with the Company’s Grievance Redressal Officer. If the complaint is not resolved within the stipulated timeframe, the borrower may escalate the matter in accordance with the Company’s Grievance Redressal Policy and RBI’s Ombudsman Scheme, as applicable.

10. Digital Lending Collections

The NBFC and its LSPs shall ensure that collection and recovery activities are carried out in compliance with RBI Digital Lending Directions, 2025.

Any recovery agent assigned shall be disclosed to the borrower before initiating recovery activities.

NBFC shall remain fully responsible for actions of recovery agents, DSAs, collection agencies and LSPs engaged by it.

11. Data Privacy Clause

Borrower information obtained during collection and recovery shall remain confidential and shall not be disclosed except as permitted by law.