Policies & Code of Conducts

Peerless Financial Services Ltd. (PFS) adopted a Fair Practices Code (FPC) for its lending business in 2015 pursuant to RBI directives on Non-Banking Financial Company (NBFC), Fair Practices Code (FPC) issued earlier. The RBI has issued revised NBFC FPC guidelines in September 2016. Accordingly, it is proposed to revise the Fair Practices Code of PFS on following termsrepresenting the revised guidelines.

Applications for loans and their processing

• All communications by PFS to the prospective borrower shall bemade in vernacular language or a language understood by the borrower.
• The Loan application form of PFS shall contain necessary information to facilitate the borrowerin makinga meaningful comparison with the terms and conditions offered by other NBFCs and taking an informed decision based on the comparison. The form shall contain a list of documents requiredto be submitted by the borrower alongwith the duly filled up form for processing the application. Further, the terms and conditions of loan like interest rate, tenor etc. may be discussed by PFS with the borrower.
• PFS will have a mechanism of issuing acknowledgement for receipt of the duly filled up loan application alongwith necessary documents to the borrower. The decision of PFS regarding acceptance or rejection of applicationwill beconveyed to the borrower within a reasonable period of time from the date of receipt of the required information from the borrower in full.

Loan appraisal and terms & conditions

• PFS will process the loan application in accordance with the Board approved Lending Policy that provides for internal credit scoring of the borrower based on risk profile and loan pricing. On sanction of loan PFS shall convey to the borrower in writing the terms of sanction of loan including amount sanctioned, annualized rate of interest and the method of its application, penal interest applicable in case of default etc. by means of sanction letter in vernacular language or a language understood by the borrower,.A copy of the sanction letter bearing acceptance of the borrower of the terms thereof will beput on record by PFS.
• The loan agreement shallspecifyin bold the penal interest applicable in case of late payment or default by the borrower.
• PFS shallat the time of sanction / disbursement furnish a copy of the loan agreement and each of the other loan documents executed to the borrower for ready reference.

Disbursement of loans including changes in terms and conditions

• PFS shall communicate any change in the terms and conditions of loan including disbursement schedule, interest rates, service charges, prepayment charges etc. through its published website/public notice or by issuing appropriate notice if specific to a borrower, in vernacular language or a language understood by the borrower.
• Changes in interest rates and service charges/levieswill be effected prospectively. A suitable provision in this regard shall be incorporated in the loan agreement.
• Decision of PFS, if any, to recall/accelerate payment or performance under the loan agreement shall be in consonance with the agreement.
• PFS shall release all securities created for the loan upon repayment of all dues by the borrower or on realisation by PFS of the outstanding amount of loan in full, subject to any legitimate right or lien for any other claim that PFS may have against the borrower. If such right of set off is to be exercised, the borrower shall be given due notice with particulars of the claim of PFS and the conditions under which PFS will be entitled to retain the securities till the relevant claim is settled/paid.

Other general provisions

• PFS shall refrain from interference 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 come to the notice of PFS). However, this does not imply that the commitment will encroach the right of PFS to recovery and enforcement of security under law, whatsoever.
• In case of receipt of request from the borrower for transfer of his account, the consent or otherwise, i.e., objection of PFS, if any, shall be conveyed to the borrower within 21 days from the date of receipt of request. Such transfer shall be as per transparent contractual terms in consonance with law.
• PFS shall not resort to any harassment, such as persistently bothering the borrower at odd hours, use of muscle power for recovery of loan, etc. To ensure this, the staff will be adequately trained to deal with the customers in an appropriate manner.
• As a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers, PFS shall not charge foreclosurecharges/prepayment penalties on floating rate term loans sanctioned to individual borrowers.

Grievance redressal

• PFS shall have an internal Grievance Redressal Cell laid down by its Board of Directors for resolving disputes arising out of the decisions of the company’s lending business functionaries. The Cell will hold meeting within a period of 2 weeks from the date of receiving any grievance intimation. The grievance will be disposed of by the Cell after hearing or, if required, be escalated to the next higher level.
• The Board of Directors of PFS shall provide for periodic review of the compliance of the Fair Practices Code and the functioning of the grievance redressal mechanism at various levels of management. A consolidated report of such reviews shall be submitted to the Board at regular intervals, as may be prescribed by it. The constitution of the Cell will be as under: Grievance Redressal Officer

  Name : Mr. Partha Bose

  Tel : 033-22625663

  Mobile : 09830684022

  E-Mail : partha.bose@peerlessfinance.in

• The Grievance Redressal officer can be approached by the public for resolution of complaints against the Company. If such complaints/disputes are not redressed within a period of 1 month, the customer may appeal to the MD & CEO of PFS at ceo@peerlessfinance.inor the Officer-In-Charge of the concerned Regional Office of the Department of Non-Banking Supervision of RBI.

  Grievance Against	Grievance redressal Authority
  Top Management (MD & CEO)	Board
  Junior &Middle Management – Jr. Officer to Exe. Director	MD & CEO

Regulation of Interest Rate

PFS has laid down appropriate internal principles and procedures for determining interest rates and processing and other charges on loans. The principles & procedures are incorporated in the Lending Policy of the company which is approved by its Board of Directors. The policy has adopted an interest rate model taking into account relevant factors like cost of funds, margin and risk premium. The Credit Score of the borrower is computed using the model based on various parameters including the borrower’s profile, financial strength, credit history, business condition, regulatory environment affecting the business, security, type of product etc. The credit score quantifies the risk grade of the borrower. The rate of interest on loan is expressed on annualised basis so that the borrower is aware of the exact rate that will be charged to the account.

The rates of interest, the approach for gradation of risk and rationale for charging different rates of interest to different categories of borrowers shall be suitably disclosed by PFS in its loan application form and communicated in the loan sanction letter. The information will also be made available on the company’s website or published in newspaper and updated whenever there is change in the rates of interest.

Conclusion

PFS has laid down appropriate internal principles and procedures for determining interest rates and processing and other charges on loans. The principles & procedures are incorporated in the Lending Policy of the company which is approved by its Board of Directors. The policy has adopted an interest rate model taking into account relevant factors like cost of funds, margin and risk premium. The Credit Score of the borrower is computed using the model based on various parameters including the borrower’s profile, financial strength, credit history, business condition, regulatory environment affecting the business, security, type of product etc. The credit score quantifies the risk grade of the borrower. The rate of interest on loan is expressed on annualised basis so that the borrower is aware of the exact rate that will be charged to the account.

PEERLESS FINANCIAL SERVICES LIMITED

• CIN : U65993WB1988PLC044077
• Registered Office : Peerless Bhavan, 3, Esplanade East, Kolkata 700069
• Tel : +91-33-22625663, Fax : +91-33-22625664, E-mail : pfs@peerlessfinance.in , Website: www.peerlessfinance.in

“Know Your Customer” (KYC) & Anti-Money Laundering (AML)Policy

Preamble:

Reserve Bank of India (RBI) on February 25, 2016 notified the Know your customer (KYC) Directions, 2016 (KYC Directions, 2016) as updated on 12th July, 2018, inter alia, directing that every Regulated Entity shall have a Know your customer (KYC) Policy duly approved by the Board of Directors. These directions have been issued by the RBI in terms of the provisions of Prevention of Money-Laundering Act, 2002 (PMLA) and the Prevention of Money-Laundering (Maintenance of Records) Rules 2005.

Peerless Financial Services Limited (PFS) is NBFC- Investment and Credit Company (NBFC-ICC) as categorised by RBI (vide notification No. : RBI/2018-19/130 DNBR (PD) CC.No.097/03.10.001/2018-19 dated 22.02.2019). It is further categorized as a Non-Systemically Important Non-deposit taking NBFC (Regulated Entity as defined under these Directions). It provides loan to various persons including Companies and other entities. It does not accept deposits.

Accordingly, the following KYC Policy has been adopted by the Board suitably, superseding the existing KYC & AML Policy of the Company, as amended from time to time.

1. This Policy shall be called as the ‘Know Your Customer & Anti Money Laundering (KYC & AML) Policy 2019 of The Peerless Financial Services Limited (PFS).


2. Objectives:

   To have a clearly laid out:

   1. Customer Acceptance policy,
   2. Risk Management policy,
   3. Customer Identification Procedure (CIP) and
   4. Monitoring of Transactions.

   with a view to: -

   1. put in place an effective system and procedure for customer identification and verifying its / his / her identity and residential address and conduct customer due diligence (CDD) based on the risk factor associated with each customer;
   2. have in place a system of assessing and monitoring the risk factors associated with each customer;
   3. put in place a system of checks and balances to ensure formulation and effective implementation of procedures to help control and mitigate the risk of occurrence of financial frauds, swiftly identify probable transactions of money laundering and related suspicious activities and safeguarding PFS from being unwittingly used as a conduit for transfer or deposit of funds derived from criminal activity or for financing of terrorism, irrespective of whether such money can be traced to a specific act of terrorism or not;
   4. monitor transactions of a suspicious nature and report the same to the Financial Intelligence Unit- India (FIU- IND); verification and maintenance of records of transactions of customers in accordance with PMLA and the Rules made thereunder;


3. Definitions:

   For the purpose of this Policy -

   “Customer” means an individual who is engaged in a financial transaction or activity with PFS and includes a person on whose behalf the person(s) who is/are engaged in the transaction or activity, is acting.

   Other terms not specifically defined here shall have the same meaning as assigned to them under the RBI-KYC Directions, 2016 as updated from time to time or the PMLA.

4. Customer Acceptance Policy (CAP), Risk Management, Customer Identification Procedure (CIP),

   Monitoring of Transactions:

   1. Customer Acceptance Policy
      • Customers who are acceptable to PFS as per the Risk categorization should fulfil all criteria related to submission of Officially Valid Documents (OVD) as defined by RBI from time to time and more specifically stated under the Customer Identification Procedure in the table set out separately.
      • PFS shall refrain from opening an account, where PFS is unable to apply appropriate Customer Due Diligence (CDD) measures, either due to non- cooperation of the customer or non-reliability of the document/ information furnished by the customer.
      • No transaction or account based relationship is undertaken without following the CDD procedure.
      • The mandatory information to be sought for KYC purpose while opening an account and during the periodic updation, is specified
      • PFS shall apply the CDD procedure at the UCIC level. Thus, if an existing KYC complaint customer of the company desires to open another account, there shall be no need for a fresh CDD exercise.
      • In the event, the customer is permitted to act on behalf of another person/entity, PFS shall verify that the customer has the necessary authority to do so by scrutinizing the authorizing document/s. Circumstances in which, a customer is permitted to act on behalf of another person/ entity, to be mentioned.
      • An account shall not be opened in an anonymous or fictitious/ benami name(s) and PFS will also use RBI caution advices in determining the customer acceptance framework.
      • ‘Optional’/additional information, shall be obtained with the explicit consent of the customer after the account is opened.
      • CDD Procedure shall be followed for all the joint account holders, while opening a joint account.
      • Circumstances system is put in place to ensure that the identity of the customer does not match with any person or entity, whose name appears in the sanctions lists circulated by Reserve Bank of India.
   
   
   2. Risk Management
      • Risk categorization of customers shall be undertaken on the basis of various factors, such as nature of employment, business activity of the customer, location of customer and his/its clients, mode of payments, volume of turnover, social / financial status and credit history. PFS may at its discretion identify additional factors that it may wish to utilize for customer acceptance based on risk profile determined by PFS.

        While considering customer’s identity, the ability to confirm identity documents through online or other services offered by issuing authorities may also be factored in.

      • The company may categorize its customers into ‘High Risk / Medium Risk / Low Risk’ according to risk perceived based on its experience and review it from time to time. The company may devise procedures for creating risk profiles of its existing and new customers and apply various Anti- Money Laundering measures keeping in view the risks involved in a financial transaction or a business relationship. The company’s internal audit and compliance functions shall play an important role in evaluating and ensuring adherence to KYC policies and procedure, including legal and regulatory requirement. The compliance in this regard is being and will continue to be put up before the Audit Committee / Board on a periodical basis.

      Note : FATF Public Statement, the reports and guidance notes on KYC/AML issued by the Indian Banks Association (IBA), guidance note circulated to all cooperative banks by the RBI etc., may also be used in risk assessment.

   3. Customer Identification Procedure
      • PFS shall ensure that customer identification process is undertaken, whenever an account based relationship is being established.
      • While undertaking customer identification, PFS shall ensure that the decision-making functions of determining compliance with KYC shall not be outsourced.
      • PFS shall be adequately satisfied with the information furnished by each new customer with respect to identity of the customer and the purpose of the intended nature of relationship with PFS. The satisfaction of PFS with respect to the information/ documents furnished by the customers should be such that if circumstances necessitate, PFS shall ensure that it is in a position to satisfy the competent authorities that CDD was duly observed by PFS, based on the risk profile/categorization of the customer.
      • As stated in the Customer Acceptance Policy, PFS shall ensure that its customer is not a fictitious person by verifying the identity of the customer through documentation and shall also carry out necessary checks, so as to confirm that the identity of the customer on the basis of the documents obtained does not match with any person with known criminal background or with banned entities, such as individual terrorists or terrorist organizations.
      • Customer Due Diligence shall be carried out as per the RBI KYC / AML Directions, as may be issued from time to time and following the means and measures as may be available in the market.
      • One or more of the following valid self-attested documents may be called for from the customers as OVD, containing details of proof of their identity and address:

      Type of Customer	Officially Valid Documents
      In case of Individuals	Identity proof:(Copy of one of the following) Passport Driving Licence Income Tax PAN Card Voter’s Identity Card Aadhar Card Residence proof:(Copy of one of the following) Utility Bill (Latest Telephone / Post-paid mobile / Electricity bill) Property or Municipal Tax receipt Bank Account or post office savings bank account statement Passport Driving Licence Voter’s Identity Card Aadhar Card A copy of the marriage certificate or Gazette notification, in case of change in name
      In case of Non- Individual(As applicable)	Identity & Residence proof:(Copies of the following) Income Tax PAN Card Incorporation Certificate & Memorandum & Articles of Association (Registration Certificate & Deed, in case of Partnership firm/Trust) CST/VAT/Service Tax registration / Shops & Establishment Certificate, as applicable Utility bill of not more than 2 months’ old. (Bills of Electricity, telephone, post-paid mobile, water etc.) List of Directors/Partners/Trustees along with their OVDs as above. Latest shareholding pattern, along with the list of major shareholders having more than 25% of holding List of the beneficial owner i.e. the natural person(s) in case of company.

      The e-KYC service of Unique Identification Authority of India (UIDAI) shall be accepted as a valid process for KYC verification under the PML Rules.

      • In addition to verification through one or more of the above said documents, the company may also call for suitable introduction by a person known to the company/group companies.
      
      
      • Simplified procedure for opening accounts by Non-Banking Finance Companies (NBFCs):

        In case a person who desires to open an account is not able to produce KYC documents, PFS may at its discretion open accounts by following the simplified procedure, as may be directed by RBI from time to time.

        While opening accounts as described above, the customer would be made aware that the value of transaction at any point of time shall not exceed Rs.50,000/-. No further transactions will be permitted until the full KYC procedure is completed.

        If an existing KYC-compliant customer of PFS desires to open another account with PFS, there shall be no need for a fresh CDD exercise.

      • Identification of Beneficial Owner

        For opening an account of a Legal Person who is not a natural person, the beneficial owner(s) shall be identified and all reasonable steps in terms of Rule 9(3) of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, and amendments thereto, to verify his/her identity shall be undertaken keeping in view the following:

        1. Where the customer is a company, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical persons, has/have a controlling ownership interest or who exercise control through other means. Explanation- For the purpose of this sub-clause-
           1. “Controlling ownership interest” means ownership of/entitlement to more than 25 per cent of the shares or capital or profits of the company.
           2. “Control” shall include the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements.
        2. Where the customer is a partnership firm, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has/have ownership of/entitlement to more than 15 per cent of capital or profits of the partnership.
        3. Where the customer is an unincorporated association or body of individuals, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has/have ownership of/entitlement to more than 15 per cent of the property or capital or profits of the unincorporated association or body of individuals.

           Explanation: Term ‘body of individuals’ includes societies. Where no natural person is identified under (a), (b) or (c) above, the beneficial owner is the relevant natural person who holds the position of senior managing official.

        4. Where the customer is a trust, the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.
   
   
   4. Monitoring of Transactions:
      1. The company normally does not and would not have large cash transactions. However, if and when cash transactions of Rs.10 lakhs and above are undertaken, the company will keep proper record of all such cash transactions in a separate register maintained at its office.
      2. The company shall monitor transactions of a suspicious nature on an ongoing basis for the purpose of reporting it to the appropriate authorities. The extent of monitoring by the Company will depend on the risk sensitivity of the account and special attention will be given to all complex unusually large transactions, which have no apparent economic or lawful purpose.
      3. The company shall promptly report such high value cash transactions or transactions of a suspicious nature to the appropriate regulatory and investigating authorities, as per the provisions of the PMLA and the Rules made thereunder.
      4. PFS shall exercise caution with respect to the transactions with persons (including legal persons and other financial institutions) from the countries which have been identified by Financial Action Task Force (FATF) as high risk and non-cooperative jurisdictions with respect to compliance with the FATF Recommendations, 2012.
      • On-going Due Diligence

        PFS shall undertake on-going due diligence of customers to ensure that their transactions are consistent with their knowledge about the customers, customers’ business and risk profile; and the source of funds. The extent of monitoring shall be aligned with the risk category of the customer.

      • Periodic Updation

        Periodic updation shall be carried out at least once in every two years for high risk customers, once in every eight years for medium risk customers and once in every ten years for low risk customers as per the following procedure:

        1. PFS shall carry out
           1. PAN verification from the verification facility available with the issuing authority and
           2. Authentication, of Aadhaar Number when available with PFS with the explicit consent of the customer in applicable cases.
           3. In case identification information available with Aadhaar does not contain current address an OVD containing current address may be obtained.
           4. Certified copy of OVD containing identity and address shall be obtained at the time of periodic updation from individuals not eligible to obtain Aadhaar, except from individuals who are categorised as ‘low risk’. In case of low risk customers when there is no change in status with respect to their identities and addresses, a self-certification to that effect shall be obtained.
           5. In case of Legal entities, RE shall review the documents sought at the time of opening of account and obtain fresh certified copies.
        2. PFS may not insist on the physical presence of the customer for the purpose of furnishing OVD or furnishing consent for Aadhaar authentication unless there are sufficient reasons that physical presence of the account holder/holders is required to establish their bona-fides. Normally, OVD/Consent forwarded by the customer through mail/post, etc., shall be acceptable.
        3. PFS shall ensure to provide acknowledgment with date of having performed KYC updation.
        4. The time limits prescribed above would apply from the date of opening of the account/ last verification of KYC.

        Necessary actions, such as, freezing, partial freezing etc. of accounts may be considered after giving three notice to the concerned customers.

      • Enhanced Due Diligence

        Accounts of non-face-to-face customers: REs shall ensure that the first payment is to be effected through the customer's KYC-complied account with another RE, for enhanced due diligence of non-face to face customers.

      1. Accounts of Politically Exposed Persons (PEPs):

         Politically Exposed Persons (PEPs) are individuals, who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States/Governments, senior politicians, senior government/ judicial/military officers, senior executives of state-owned corporations, important political party officials, etc.

         Generally, PFS would not open accounts of PEP. Decisions of opening Accounts of PEP shall be approved by senior management and shall be subjected to enhanced monitoring.

      • Client accounts opened by professional intermediaries:

        Owing to the fact that accounts may be

        1. opened by professional intermediaries on behalf of entities like mutual funds, pension funds or other types of funds or
        2. managed by lawyers/chartered accountants or stock brokers for funds held 'on deposit' or 'in escrow' for a range of clients, PFS shall ensure identification of all beneficial owners in respect of such accounts.

        Further, PFS shall also ensure that the CDD conducted by the intermediaries is in line with KYC requirements mandated by RBI. PFS shall ensure that no professional intermediary, who cannot reveal the identity of a customer should be allowed to open such an account with it.

      • Simplified KYC norms for Foreign Portfolio Investors (FPIs)

        Accounts of FPIs which are eligible/ registered as per SEBI guidelines, for the purpose of investment under Portfolio Investment Scheme (PIS), shall be opened by accepting KYC documents as prescribed by RBI, subject to Income Tax (FATCA/CRS) Rules.

      • Information obtained from Customers

        All the information collected from the customers by PFS shall be kept confidential and all such information shall be treated as per the agreement/terms and conditions signed by the customers. Additionally, the information sought from each customer should be relevant to the risk perceived in respect of that particular customer, should not be intrusive and should be in line with the guidelines issued by the RBI in that behalf.

      • Record Management

        PFS shall take steps in the direction of maintenance and preservation of the records pertaining to KYC and transactions for the time duration of 5 years for KYC-related and transaction-related documents as prescribed by RBI.

      • Other Requirements

        All other requirements under FATCA/CRS/PML/FIU-Ind relating to appointment of designated officer/director, principal officer and reporting requirements relating to filling of Suspicious Transaction Report (STR), Cash Transaction Report (CTR), counterfeit currency report (CCR) and other applicable reports filling under FATCA will be complied with in terms of the direction of the RBI or the other authorities to the extent applicable to PFS.

5. General:

   This Policy is subject to KYC-AML direction of RBI as may be issued from time to time.

   With the explicit consent of the customers KYC documents may be verified from the record of the respective repositories and also be submitted to the Central KYC Registry. Further, all information relating to the customer and his account shall also be submitted to the Information Utilities and CICs (Credit Information Companies).

   16/05/2019

Pricing of Loan Products / Interest Rate Model for 2019-20

Depending upon various factors like, profile, location, credit worthiness, spending habits, net worth, disposable income, and KYC declarations etc. of customers and the prevailing interest rate in the market, Peerless Financial Services Limited (Peerless Finance) charges interest rate ranging from 9% to 16% p.a. as determined by risk categorisation of the customer. Rate of Interest, Processing and other charges are mentioned explicitly and in bold, in the sanction letter / facility agreement.

• Rate of Interest charged on different Loan Products are as follows:

  Sl. No.	Products	Pricing
  		Minimum	Maximum
  1	Loan Against Salary	10.50% p.a.	16.00% p.a.
  2	Loan to Professionals	10.00% p.a.	16.00% p.a.
  3	Loan Against Property	10.00% p.a.	16.00% p.a.
  4	Loan Against Insurance Policy	10.00% p.a.	16.00% p.a.
  5	Margin Funding	12.00% p.a.	16.00% p.a.
  6	Corporate Loan	10.00% p.a.	16.00% p.a.
  7	Equipment Finance	9.50% p.a.	16.00% p.a.
  8	SME Loan	10.00% p.a.	16.00% p.a.
  9	Loan against Marketable Securities	9.50% p.a.	16.00% p.a.

Penal Interest: A Penal Interest of 1%-3%, plus applicable taxes, is charged depending upon the Product and other factors, including profile of the client and tenure of loan. In case there is any discount or waiver in Penal Interest for a particular customer by the MD & CEO, the same shall be duly recorded in the proposal giving justification.

Prepayment Charges: Up to 4%, plus applicable taxes, is charged depending upon the Product and other factors, including profile of the client, tenure of loan and management expenses incurred thereon. In case there is any discount or waiver in prepayment charges for a particular customer by the MD & CEO, the same shall be duly recorded in the proposal giving justification.

Upfront Fees / Processing Charges: Upfront or a Processing Fees/Charges are levied as one-time non-adjustable and non-refundable processing charges and are usually collected at the time of issue of sanction letter; before execution of Loan Documents or even adjusted with the amount of loan disbursed to the client. There would be a processing fee applicable up to 4% of the sanctioned loan amount.

Depending upon the profile of the customer, the nature of loan and prevalent competitive market scenario, Peerless Finance may levy suitable upfront fees. In case the upfront fee is waived for a particular customer by the MD & CEO, the same shall be duly recorded in the proposal giving justification.

Commitment Charges: To facilitate proper funds management, the customer will be required to submit a concrete withdrawal plan at the time of sanction of the loan, in case of loan as over-draft facility (SME/Corporate, Loan against Marketable Securities). In case the customer does not avail disbursement as per withdrawal plan, a commitment charge of up to 3% p.a. may be levied, plus applicable tax. This may be done on case to case basis with the approval of sanctioning authority. In case the commitment charges is waived (exceptional circumstances) for a particular customer by the MD & CEO, the same shall be duly recorded in the proposal giving justification.

Loan Documentation Charges: Expenses incurred on drafting of loan and security documents, property title investigation, property valuation, stamp duty, registration charges, vetting of loan and security documents by lawyers etc. shall be charged to the customer on actual basis or at such rate deemed fit, plus applicable tax.

Cheque Return Charges: A cheque/ECS/ACH return charge of Rs.500/-, plus applicable taxes, per return shall be levied on the customer.

Out of Pocket Expenses: Out of Pocket Expenses (OPE) consist of traveling expenses for inspections/site visits, valuation expenses, insurance premium paid for insuring the assets financed by the lenders in case the customer fails to insure the assets in time and other incidental expense. All these OPE should be recovered from the customers on actual basis and a suitable clause shall be inserted in the Letter of Intent/Loan Agreement.

Review/Renewal Fee: Depending upon the profile of the customer, quality of the underlying security, prevailing market scenario, etc., Peerless Finance may consider levying suitable review/renewal fee at the time of annual review of the loan account. In case the review/renewal fee is waived by MD & CEO, in order to retain a particular customer, the same shall be duly recorded in the proposal giving justification.

GST and/or any other taxes: GST and/or any other tax shall be recovered over and above the tariff mentioned above, except on Interest.




Updated on 4th April 2019

Whistle Blower Policy

1. INTRODUCTION
   
   1. Carrying forward the values of the Peerless Group, PFS is committed to the highest standards of integrity, honesty, fairness and ethics coupled with complete transparency in all its actions.
   2. PFS believes in the best corporate governance practices which promote professionalism. Accordingly, with a view to reinforcing its commitment to fairness and integrity of its own and its employees, PFS has put in place this “Whistle Blower Policy with adequate mechanism to address any complaint related to questionable practices, internal controls, auditing matters or reporting of information to the shareholders, the Government Agencies, Regulatory Authorities etc. Such a mechanism will allow the employees to disclose internally of such matters without fear of reprisal, discrimination or adverse employment consequences.
   3. Similarly, PFS encourages its customers, vendors and other stakeholders to report to the appropriate authority of management about the instances of unethical behaviour, actual or suspected fraud or serious irregularities within the company.
   4. This Whistle Blower Policy neither absolves the employees from their duty of confidentiality in the course of their work nor is it a route for taking up a grievance about a personal situation.
   5. This Whistle Blower Policy aims at:
   1. Ensuring complete confidentiality and providing adequate protection of the Whistle Blower and the person processing the Protected Disclosure from any victimization, unless proved otherwise.
   2. Taking prompt action against person(s) trying to victimize the Whistle Blower and against the person(s) trying to destroy the evidence of the Protected Disclosure or trying to put undue influence or coercion on the Whistle Blower.
   3. Providing an opportunity to the subject/person(s) involved to put forth his/their viewpoint.
   6. This Whistle Blower Policy may be reviewed annually by the Board of Directors and amendments may be made if deemed fit.


2. DEFINITIONS
   
   1. “Whistle Blower” means someone who makes a Protected Disclosure under this Policy.
   2. “Protected Disclosure” means a concern raised by a written communication made in good faith that discloses or demonstrates information that may reveal/evidence unethical or improper activity.
   3. “Subject” means a person against or in relation to whom a Protected Disclosure is made or evidence gathered during the course of an investigation.
   4. “Investigators” means any person(s) authorised, appointed, consulted or approached by the MD & CEO of the Company or the Chairman of the Audit Committee of Directors to conduct an investigation under this Policy.
   5. “Action or Disciplinary Action” means any action that can be taken against the employee as per the provisions of the Service Rule and Code of Conduct as laid down in the HR Policy of the company.


3. COVERAGE OF POLICY
   

   The Policy covers malpractices and events which have taken place/ suspected to take place involving:

   1. Abuse of authority.
   2. Fraud or suspected fraud or corruption.
   3. Manipulation/destruction of company’s records.
   4. Breach of contract with criminal intent.
   5. Misappropriation/misuse of company’s funds/assets.
   6. Theft of confidential/propriety information for passing on the same to competitors.
   7. Deliberate violation of law/regulation.


4. EXCLUSIONS
   
   1. This Whistle Blower Policy should not be used for Employee Grievance Redressal or a route for raising malicious or unfounded allegations against colleagues.
   2. While it will be ensured that genuine Whistle Blowers are accorded complete protection from any kind of unfair treatment, any abuse of this protection will warrant disciplinary action.
   3. Protection under this Policy would not mean protection from disciplinary action arising out of false or bogus allegations made by a Whistle Blower knowing it to be false or bogus or with a mala fide intention.


5. PROCEDURE
   1. Any Employee, vendor, customer or any other stakeholder can make a protected disclosure in writing elaborating the issue in explicit terms either by way of a confidential letter or e-mail addressed to the Chairman, Audit Committee of Directors, as under:
   
   
   The Chairman,
   Audit Committee of Directors
   Peerless Financial Services Limited
   Peerless Bhavan,
   3, Esplanade East,
   Kolkata - 700 069
   Email: dchatterji@lbjha.com
   2. The Whistle Blower should disclose his/her identity in the covering letter forwarding such protected disclosure.
   3. Normally, anonymous protected disclosures are not considered. However, if the disclosure is serious and sensitive in nature, the company may initiate an investigation into the said anonymous disclosure solely at its discretion.
   4. If initial enquiries by the Investigators indicate that the issue raised has no basis or it is not a matter to be pursued under this Policy, it may be dismissed at initial stage itself after due documentation.
   5. The identity of the Subject and the Whistle Blower shall be kept confidential to the extent possible and as permitted under law of the land. Any other Employee assisting in the investigation shall also be protected to the same extent as that provided to the Whistle Blower and the Subject.
   6. Subject will be informed of the allegations at the beginning of a formal investigation and shall be given an opportunity to offer explanations during the investigation process.
   7. The Subject is duty bound to co-operate during the investigation process.
   8. The investigation shall be conducted in a fair manner as an unbiased fact-finding exercise and without presumption of guilt. A written report of the findings shall be submitted to the appropriate authority. The appropriate authority will be the Chairman of the Audit Committee of Directors.
   9. In case the Protected Disclosure is proved, the appropriate authority shall take necessary action as he may think fit and take preventive measures to avoid recurrence of the matter.


6. PROTECTION
   
   1. PFS shall provide complete protection to the Whistle Blower against any type of internal harassment like intimidation, retaliation or threat of termination/suspension of service, disciplinary action, transfer, demotion, refusal of promotion, discrimination including any direct or indirect use of authority to obstruct the Whistle Blower’s right to continue to perform his/her duties. In case any Subject or any concerned employee resorting to any type of harassment as mentioned above shall be declared as having committed a breach of the Company’s principles warranting suitable disciplinary action including dismissal from service.
   2. PFS shall take sufficient action to minimize difficulties which the Whistle Blower may experience as a result of making the Protected Disclosure. Thus, if the Whistle Blower is required to give evidence in criminal or disciplinary proceedings, the Company will arrange for the Whistle Blower to receive advice about the procedure, etc.
   3. The identity of the Whistle Blower shall be kept confidential to the extent possible and as permitted under law. Any other Employee assisting in the investigation or furnishing evidence shall also be protected to the same extent as that provided to the Whistle Blower.

REPORTING OF PROTECTED DISCLOSURES


An annual report on the status of investigations and action taken on Protected Disclosures shall be submitted to the Audit Committee of Directors.

--------------------------

Nomination & Remuneration Policy

Introduction

The Company considers human resources as its invaluable asset which should be nurtured and groomed for organizational development. This Policy for nomination and remuneration of Directors, Key Managerial Personnel and Senior Management has been formulated by the Nomination & Remuneration Committee (“Committee”), as required under section 178 of the Companies Act, 2013.

This Policy lays down criteria and processes to ensure equitable remuneration to all Directors, Key Managerial Personnel (KMP) and other employees of the Company and to harmonize the aspirations of the human resources in line with the goals of the Company.

• Objectives of the Policy:

  The objectives of this policy are:

  To lay down criteria and terms & conditions with regard to identifying persons qualified to become Directors (Executive and Non-Executive) and Senior Management and Key Managerial positions

  To determine remuneration based on the Company’s size, financial position, trends and practices on remuneration prevailing in peer companies and industry as a whole.

  To carry out evaluation of the performance of Directors.

  To provide them rewards linked directly to their effort, performance, dedication and achievement relating to the Company’s operations.

  To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons commensurate with the requirements of the Company.

• Effective Date

  This policy shall be effective from 01.04.2015

• Constitution of the Nomination and Remuneration Committee

  The Board of Directors, at the meeting held on 6th May, 2014 had constituted the Company’s Nomination & Remuneration Committee in compliance with the requirements of Section 178 of the Companies Act, 2013 as also of the Reserve Bank of India.

• Applicability

  The Policy is applicable to:

  Directors (both, Executive and Non-Executive)

  Key Managerial Personnel

  Senior Management Personnel

  “Senior Management” for the purpose of this Policy means personnel of the Company who are members of its core management team excluding Board of Directors comprising all members of management one level below the executive directors including the functional heads.

• General

  This Policy is divided in three parts: Part – A covers the matters to be dealt with and recommended by the Committee to the Board, Part – B covers the nomination, appointment and removal, and Part – C covers remuneration, perquisites etc.

  The key features of this Company’s policy shall be included in the Board’s Report.

• PART – A

  MATTERS TO BE DEALT WITH AND RECOMMENDED TO THE BOARD BY THE NOMINATION AND REMUNERATION COMMITTEE

  The Committee shall:

  Formulate the criteria for determining qualifications, positive attributes and independence of a director

  Identify persons who are qualified to become Directors, Key Managerial and Senior Management Personnel in accordance with the criteria laid down in this policy

  Recommend to the Board, appointment and removal of Director, KMP and Senior Management Personnel.

  Apart from the above, as and when directed by the Board, appointment to any other senior level positions will also be dealt with by the Committee.

• PART PART – B

  POLICY FOR APPOINTMENT AND REMOVAL OF DIRECTOR, KMP AND SENIOR MANAGEMENT

  Appointment criteria and qualifications:

  1. The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or Senior Management position and recommend to the Board his / her appointment.
  2. A person should possess adequate qualification, expertise and experience, commensurate with the requirements of the position he / she is considered for appointment. The Committee has discretion to decide the adequacy of qualification, expertise and experience of a person for the concerned position.
  3. As for qualifications and other attributes for being appointed as Director, both Executive and Non-Executive, the incumbent should :
     1. at least be a Graduate;
     2. financially literate so as to read and understand the financial statements;
     3. have held senior position in any organization of repute;
     4. be resident in India;
     5. where he is proposed to be appointed as a Non-Executive Independent Director, satisfy the ‘criteria of independence’ as provided in the Companies Act, 2013 and possess other attributes as specified in the said Act.

     The candidates for appointment as Executive and Non-Executive Directors shall generally be identified through the Company’s internally established selection process. The Company may, nevertheless, take the assistance of external consultants to identify candidates, where necessary.

  4. For the benefit of the Company, the Board may appoint or continue the appointment of any person who has attained the age of seventy years as Managing Director or Wholetime Director with the approval of shareholders by a special resolution in general meeting.

  Terms of Appointment

  1. Managing Director/Whole-time Director:

     The Board may appoint or re-appoint any person as its Managing Director or Executive Director for a term as may be determined by the Board but not exceeding five years at a time, as prescribed by law. No re-appointment shall be made earlier than one year before the expiry of term.

  2. Independent Director:

     An Independent Director shall hold office for a term up to five consecutive years on the Board of the Company and will be eligible for re-appointment on passing of a special resolution by the Company and disclosure of such appointment in the Board's report. Provisions of the Companies Act, 2013 relating to tenure, directorships limits, restriction on appointments, etc. shall apply.

  3. Evaluation:

     The Committee shall carry out evaluation of performance of every Director on yearly basis. This will be in addition to the evaluation of the Directors to be done by the Independent Directors as prescribed by law.

  4. Removal:

     The Committee may recommend, to the Board, with reasons recorded in writing, removal of a Director, KMP or Senior Management Personnel, due to any disqualification mentioned in the Companies Act, 2013, rules made thereunder or under any other applicable Act, rules and regulations.

  5. Retirement:

     The Director, KMP and Senior Management Personnel shall retire as per the applicable provisions of the Companies Act, 2013 and the prevailing policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior Management Personnel in the same position / remuneration or otherwise even after attaining the retirement age, for the benefit of the Company, subject to the provisions of the Companies Act, 2013 and the Memorandum and Articles of Association of the Company.

• PART – C

  POLICY RELATING TO THE REMUNERATION FOR THE MANAGING/WHOLE-TIME DIRECTORS, KMPs AND SENIOR MANAGEMENT PERSONNEL

  General:

  1. The remuneration / compensation / commission etc. to the Managing/Wholetime Directors, KMPs and Senior Management Personnel will be determined by the Committee and recommended to the Board for approval.
  2. The remuneration and commission to be paid to the Managing/Wholetime Directors shall be in accordance with the percentage and conditions laid down in the Articles of Association of the Company and as per the provisions of the Companies Act, 2013, and the rules made thereunder and shall be subject to the approval of the shareholders of the Company and Central Government, wherever required.
  3. Revision to the existing remuneration / compensation structure may be recommended by the Committee to the Board which should be within the slabs approved by the Shareholders in the case of Managing/Whole-time Directors.
  4. Where any insurance is taken by the Company on behalf of its Whole-time Director, Chief Executive Officer, Chief Financial Officer, the Company Secretary and any other employees for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel. Provided that if such person is proved to be guilty, the premium paid on such insurance shall be treated as part of the remuneration.

  Remuneration to Whole-time / Executive / Managing Director, KMP and Senior Management Personnel:

  1. Fixed pay: The Whole-time Director / KMP and Senior Management Personnel shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee. The breakup of the pay scale and quantum of perquisites including, employer’s contribution to P.F, pension scheme, medical expenses, club fees etc. shall be decided and approved by the Board on the recommendation of the Committee and approved by the shareholders and Central Government, wherever required.
     1. Remuneration of Managing/Wholetime Directors

        Remuneration payable to Managing and Wholetime Directors shall be fixed by the Committee considering the knowledge, experience and other attributes of the incumbent. Such remuneration shall comprise salary, perquisites and commission, within the overall ceiling of 5% or 10% (or such other percentage as may be applicable to the Company under the provisions of the Companies Act from time to time) of the net profit of the company, subject to approval of the shareholders in General Meeting. The Commission payable shall be determined on a year-to-year basis depending on the profit of the Company for that year.

     2. Remuneration Payable to KMPs and Senior Management Personnel

        Remuneration of key managerial personnel, namely Chief Financial Officer and Company Secretary and those in Senior Management (senior management meaning all members of the management one level below the Executive Directors, including Functional Heads), will be determined in a manner similar to those for Executive Directors based on recommendation made by the top Management.

        As for annual incentive payment to KMPs and those in Senior Management shall be placed to the Nomination & Remuneration Committee for approval

  2. Minimum Remuneration:

     If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Whole-time Director in accordance with the provisions of Schedule V of the Companies Act, 2013 and if it is not able to comply with such provisions, with the previous approval of the Central Government.

  3. Provisions for excess remuneration:

     If any Whole-time Director draws or receives, directly or indirectly by way of remuneration any such sums in excess of the limits prescribed under the Companies Act, 2013 or without the prior sanction of the Central Government, where required, he / she shall refund such sums to the Company and until such sum is refunded, hold it in trust for the Company.

  4. The Company shall not waive recovery of such sum refundable to it unless permitted by the Central Government.

  Remuneration to Non- Executive / Independent Director:

  1. Remuneration/Commission:

     The remuneration / commission shall be fixed based on the conditions mentioned in the Articles of Association of the Company and the Companies Act, 2013 and the rules made thereunder.

     Remuneration to the Non-Executive Directors has been prescribed by the Companies Act, 2013. The prescribed remuneration comprise fee for attending meetings of the Board and Committee and commission not exceeding 1% of the net profit of the company, subject to approval of the shareholders in General Meeting. The Commission payable shall be determined on a year-to-year basis depending on the profit of the Company for that year.

  2. Sitting Fees:

     The Non- Executive / Independent Director may receive remuneration by way of fees for attending meetings of Board or Committee thereof. The amount of such fees shall be such amount as may be fixed by the Board but not exceeding Rs. 1 lakh (Eupees one lakh) per meeting of the Board or Committee or as may be prescribed by the Central Government from time to time.

  3. Stock Options:

     An Independent Director shall not be entitled to any stock option of the Company.

  The above policy has been formulated by the Nomination and Remuneration Committee at the meeting held on 19.05.2015 and noted by the Board of Directors at its meeting held on 11.06.2015.

Terms & Conditions of Appointment of Independent Director

Policy on Resolution Framework – 2.0 for Covid-19 related stress of Individuals and Small Businesses

This Policy is made in pursuance of RBI Notification No. RBI/2021-22/31 DOR.STR.REC.11/21.04.048/2021-22 dated May 5, 2021.

This policy may be called the “Policy on Resolution Framework – 2.0 for Covid-19 related stress of Individuals and Small Businesses”.

This policy shall come into effect on the date of approval of the Board of Directors of Peerless Financial Services Limited.

This policy is made with the objective of alleviating the potential stress to individual borrowers and small businesses. It aims to provide a window to implement a resolution plan in respect of eligible corporate exposures without change in ownership, and personal loans, while classifying such exposures as Standard, subject to specified conditions.

This policy is divided into three parts. Part A of pertains to requirements specific to resolution of advances to individuals and small businesses and Part B pertains to working capital support for: (i) individuals who have availed of loans for business purposes, and (ii) small businesses, where resolution plans were implemented previously. Part C lists the disclosure requirements for the Company with respect to the resolution plans implemented under this window.

1. Resolution of advances to individuals and small businesses
   
   1. A limited window to individual borrowers and small businesses to seek resolution plans while their accounts be classified as Standard upon implementation of the resolution plan subject to the conditions specified hereafter.
   2. The following borrowers shall be eligible for the window of resolution provided that the credit facilities to the borrower was classified as Standard by the lending institution as on March 31, 2021:
      1. Individuals who have availed of personal loans of any nature or by whatever name called, excluding the credit facilities provided to the own personnel/staff of the Company.
      2. Individuals who have availed of loans and advances for business purposes and to whom the lending institutions have aggregate exposure of not more than Rs.25 crore as on March 31, 2021.
      3. Small businesses, including those engaged in retail and wholesale trade, other than those classified as micro, small and medium enterprises as on March 31, 2021, and to whom the lending institutions have aggregate exposure of not more than Rs.25 crore as on March 31, 2021.
      
      

      Further, the borrower accounts should not have availed of any resolution in terms of the Resolution Framework – 1.0 subject to the special exemption mentioned below:

      1. In cases of loans of borrowers where resolution plans had been implemented in terms of the Resolution Framework – 1.0, and where the resolution plans had permitted no moratoria or moratoria of less than two years and / or extension of residual tenor by a period of less than two years, then this window to modify such plans only to the extent of increasing the period of moratorium / extension of residual tenor subject to maximum of two years, and the consequent changes necessary in the terms of the loan for implementing such extension. The overall caps on moratorium and / or extension of residual tenor granted under Resolution Framework – 1.0 and this framework combined, shall be two years.
   3. As per the RBI Notifications, the following categories of borrowers shall not be eligible for Resolution Framework:

      The borrower accounts / credit facilities belong to the categories listed in sub-clauses (a) to (e) of the Clause 2 of the Annex to the Resolution Framework 1.0, read with the response to Sl. No. 2 of FAQs on Resolution Framework for Covid-19 related stress (Revised on December 12, 2020), both issued by the RBI, as mentioned below:

      1. MSME borrowers whose aggregate exposure to lending institutions collectively, is ₹25 crore or less as on March 1, 2020.
      2. Farm credit as listed in Paragraph 6.1 of Master Direction FIDD.CO.Plan.1/04.09.01/2016-17 dated July 7, 2016 (as updated) or other relevant instructions as applicable to specific category of lending institutions.
      3. Loans to Primary Agricultural Credit Societies (PACS), Farmers' Service Societies (FSS) and Large-sized Adivasi Multi-Purpose Societies (LAMPS) for on-lending to agriculture.
      4. Exposures of lending institutions to financial service providers2.
      5. Exposures of lending institutions to Central and State Governments; Local Government bodies (eg. Municipal Corporations); and, body corporates established by an Act of Parliament or State Legislature.
      6. All the farm credit exposures of all lending institutions, including NBFCs, of the nature listed in Paragraph 6.1 of Master Direction FIDD.CO.Plan.1/04.09.01/2016-17 dated July 7, 2016 (as updated), except for loans to allied activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture are excluded from the scope of the Resolution Framework. Subject to the above, loans given to farmer households would be eligible for resolution under the Resolution Framework if they do not meet any other conditions for exclusions listed in the Resolution Framework.]
   4. Any resolution plan implemented in breach of the stipulations of this circular shall be fully governed by the Prudential Framework for Resolution of Stressed Assets issued on June 7, 2019 (“Prudential Framework”), or the relevant instructions as applicable to specific category of lending institutions where the Prudential Framework is not applicable.
   5. Invocation of resolution process
      1. The borrower will have to put up a request to Peerless Finance and show/declare that the income/cash flows are still impacted by the COVID -19 disruption.
      2. The resolution process under this window shall be treated as invoked when the Company and the borrower agree to proceed with the efforts towards finalising a resolution plan to be implemented in respect of such borrower.
      3. In respect of applications received by the Company from the customers for invoking resolution process under this window, the assessment of eligibility for resolution shall be completed, and the decision on the application shall be communicated in writing to the applicant by the Company within 30 days of receipt of such applications.
      4. The decision to invoke the resolution process under this window shall be taken by Company independent of invocation decisions taken by other lending institutions, if any, having exposure to the same borrower.
      5. The last date for invocation of resolution permitted under this window is September 30, 2021.
      6. Once relief has been granted, the account would be treated as a Standard Asset, till the time, it is moving as per the resolution framework. The eligible borrowers’ accounts should also continue to be classified as Standard till the date of invocation of resolution under this framework. For this purpose, the date of invocation shall be the date on which both the borrower and the Company have agreed to proceed with a resolution plan under this framework.
      7. Implementation of a resolution plan will not result in asset quality downgrade.
      8. Resolution shall be initiated only when a borrower is found to be in stress and puts up a specific request, along with justification of stress due to COVID -19.
      9. The Company will carry out necessary due diligence including evaluation of cash flows / income streams of the borrower to establish the necessity of implementing a resolution plan in respect of concerned borrower.
      10. The request would be evaluated, necessary documents would be collected and necessary agreement/s would be executed with the borrower and the collateral provided, if any, would be completed as per the resolution plan being implemented.
      11. The changes due to implementation of a resolution plan, would be specifically communicated to the borrower, along with the revised repayment schedule.
      12. Peerless Finance shall charge a nominal documentation charge, depending upon the matter, just to cover the costs incurred in the resolution process.
      13. Managing Director & CEO shall be authorised to receive, verify and approve the resolution plan, redress the grievance of the borrowers and to make necessary accounting entries and / or adjustments and also to take necessary actions, as he may deem necessary and expedient for the interest of the Company.
   6. Permitted features of resolution plans and implementation
      1. Depending upon the request of the borrower, impact on cash-flows and understanding of the stress, resolution plan under this window may inter alia include rescheduling of payments, conversion of any interest accrued or to be accrued into another credit facility, revisions in working capital sanctions, granting of moratorium etc. based on an assessment of income streams of the borrower. However, compromise settlements are not permitted as a resolution plan for this purpose.
      2. The moratorium period, if granted, may be for a maximum of two years, and shall come into force immediately upon implementation of the resolution plan. The extension of the residual tenor of the loan facilities may also be granted to borrowers, with or without payment moratorium. The overall cap on extension of residual tenor, inclusive of moratorium period if any permitted, shall be two years.
      3. The resolution plan may also provide for conversion of a portion of the debt into equity or other marketable, non-convertible debt securities issued by the borrower, wherever applicable, and the same shall be governed in terms of Paragraphs 30-32 of the Annex to the Resolution Framework – 1.0 issued by the RBI.
      4. The instructions contained in the circular DOR.No.BP.BC/13/21.04.048/2020-21 dated September 7, 2020 on “Resolution Framework for COVID-19-related Stress – Financial Parameters” shall not be applicable to resolution plans implemented under this window.
      5. The resolution plan should be finalised and implemented within 90 days from the date of invocation of the resolution process under this window.
      6. The resolution plan shall be deemed to be implemented only if all of the following conditions are met:
         1. all related documentation, including execution of necessary agreements between lending institutions and borrower and collaterals provided, if any, are completed by the lenders concerned in consonance with the resolution plan being implemented;
         2. the changes in the terms of conditions of the loans get duly reflected in the books of the lending institutions; and,
         3. borrower is not in default with the lending institution as per the revised terms.
      7. Interest shall continue to accrue on the outstanding portion of the term loans, on cases where moratorium has been allowed.
   7. Asset classification and provisioning
      
      1. If a resolution plan is implemented in adherence to the provisions of this circular, the asset classification of borrowers’ accounts classified as Standard may be retained as such upon implementation, whereas the borrowers’ accounts which may have slipped into NPA between invocation and implementation may be upgraded as Standard, as on the date of implementation of the resolution plan.
      2. The subsequent asset classification for such exposures will be governed by the criteria laid out in the Master Circular - Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances dated July 1, 2015 or other relevant instructions as applicable to the Company (“extant IRAC norms”).
      3. In respect of borrowers where the resolution process has been invoked, the Company may sanction additional finance even before implementation of the plan in order to meet the interim liquidity requirements of the borrower. This facility of additional finance may be classified as ‘Standard’ till implementation of the plan regardless of the actual performance of the borrower in the interim. However, if the resolution plan is not implemented within the stipulated timelines, the asset classification of the additional finance sanctioned will be as per the actual performance of the borrower with respect to such additional finance or performance of the rest of the credit facilities, whichever is worse.
      4. The Company shall keep provisions from the date of implementation, which are higher of the provisions held as per the extant IRAC norms immediately before implementation, or 10 percent of the renegotiated debt exposure of the lending institution post implementation (residual debt). Residual debt, for this purpose, will also include the portion of non-fund based facilities that may have devolved into fund based facilities after the date of implementation.
      5. In case of personal loans, half of the above provisions may be written back upon the borrower paying at least 20 per cent of the residual debt without slipping into NPA post implementation of the plan, and the remaining half may be written back upon the borrower paying another 10 per cent of the residual debt without slipping into NPA subsequently.
         However, in respect of exposures other than personal loans, the above provisions shall not be written back before one year from the commencement of the first payment of interest or principal (whichever is later) on the credit facility with longest period of moratorium.
      6. The provisions required to be maintained under this window, to the extent not already reversed, shall be available for the provisioning requirements when any of the accounts, where a resolution plan had been implemented, is subsequently classified as NPA.
   8. Convergence of the norms for loans resolved previously
      1. In cases of loans of borrowers where resolution plans had been implemented in terms of the Resolution Framework – 1.0, and where the resolution plans had permitted no moratoria or moratoria of less than two years and / or extension of residual tenor by a period of less than two years, the Company may use this window to modify such plans only to the extent of increasing the period of moratorium / extension of residual tenor subject to the overall cap on extension of residual tenor, inclusive of moratorium period if any permitted, shall be two years, and the consequent changes necessary in the terms of the loan for implementing such extension. The overall caps on moratorium and / or extension of residual tenor granted under Resolution Framework – 1.0 and this framework combined, shall be two years.
      2. This modification shall also follow the timelines and conditions specified under “Invocation of resolution process” and “Permitted features of resolution plans and implementation” above. For loans where modifications are implemented in line with “Convergence of the norms for loans resolved previously”, as mentioned above, the instructions regarding asset classification and provisioning shall continue to be as per the Resolution Framework – 1.0.


2. Working capital support for small businesses where resolution plans were implemented previously
   
   1. In respect of borrowers specified at sub-clauses (b) and (c) of Clause 2 under Part A above, where resolution plans had been implemented in terms of the Resolution Framework – 1.0, the Company may, as a one-time measure, to review the working capital sanctioned limits and/ or drawing power based on a reassessment of the working capital cycle, reduction of margins, etc. without the same being treated as restructuring. The decision with regard to above shall be taken by the Company by September 30, 2021, with the margins and working capital limits being restored to the levels as per the resolution plan implemented under Resolution Framework – 1.0, by March 31, 2022.
   2. The above measures shall be contingent on the Company satisfying itself that the same is necessitated on account of the economic fallout from COVID-19. Further, accounts provided relief under these policy shall be subject to subsequent supervisory review with regard to the justifiability on account of the economic fallout from COVID-19.
   3. This policy be disclosed in the public domain and placed on the websites of the Company in a prominent and easily accessible manner.


3. Disclosures and Credit Reporting
   
   1. The Company shall make disclosures as per the format prescribed in Format-X in the annual financial statements for the financial year. The resolution plans implemented in terms of Part A of this framework should also be included in the disclosures required as per Format-B prescribed in the Resolution Framework – 1.0.
   2. The number of borrower accounts where modifications were sanctioned and implemented, the aggregate exposure of such borrowers may also be disclosed annual financial statements.
   3. The credit reporting by the Company in respect of borrowers where the resolution plan is implemented under Part A of this window shall reflect the “restructured due to COVID-19” status of the account. The credit history of the borrowers shall consequently be governed by the respective policies of the credit information companies as applicable to accounts that are restructured.

Policy on Resolution Framework – 2.0 for Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)

This Policy is made in pursuance of RBI Notification No. RBI/2021-22/32: DOR.STR.REC.12/ 21.04.048/2021-22 dated May 5, 2021.

This policy may be called the “Policy on Resolution Framework – 2.0 for Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)”.

1. This policy shall come into effect on the date of approval of the Board of Directors of Peerless Financial Services Limited.
2. This policy is made with the objective of alleviating the potential stress to Micro, Small and Medium Enterprises (MSMEs). It aims to extend the facility for restructuring of existing loans without a downgrade in the asset classification subject to the following conditions:
   1. The borrower should be classified as a micro, small or medium enterprise as on March 31, 2021 in terms of the Gazette Notification S.O. 2119 (E) dated June 26, 2020.
   2. The borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration. This shall be determined on the basis of exemption limit obtaining as on March 31, 2021.
   3. The aggregate exposure, including non-fund based facilities, of all lending institutions to the borrower does not exceed ₹25 crore as on March 31, 2021.
   4. The borrower’s account was a ‘standard asset’ as on March 31, 2021.
   5. The borrower’s account was not restructured in terms of the circulars DOR.No.BP.BC/4/21.04.048/2020-21 dated August 6, 2020; DOR.No.BP.BC.34/21.04.048/2019-20 dated February 11, 2020; or DBR.No.BP.BC.18/21.04.048/2018-19 dated January 1, 2019 (collectively referred to as MSME restructuring circulars).
   6. The restructuring of the borrower account shall be invoked by September 30, 2021. For this purpose, the restructuring shall be treated as invoked when the lending institution and the borrower agree to proceed with the efforts towards finalising a restructuring plan to be implemented in respect of such borrower. The decisions on applications received by the Company from its customers for invoking restructuring under this facility shall be communicated in writing to the applicant by the Company within 30 days of receipt of such applications. The decision to invoke the restructuring under this facility shall be taken by the Company having exposure to a borrower independent of invocation decisions taken by other lending institutions, if any, having exposure to the same borrower.
   7. The restructuring of the borrower account shall be implemented within 90 days from the date of invocation.
   8. If the borrower is not registered in the Udyam Registration portal, such registration shall be required to be completed before the date of implementation of the restructuring plan for the plan to be treated as implemented.
   9. Upon implementation of the restructuring plan, the lending institutions shall keep provision of 10 percent of the residual debt of the borrower.
   10. All other instructions specified in the circular DOR.No.BP.BC/4/21.04.048/2020-21 dated August 6, 2020 shall remain applicable.
   11. A provision of 5% in addition to the provisions already held, shall be made in respect of accounts restructured under these instructions. Banks will, however, have the option of reversing such provisions at the end of the specified period, subject to the account demonstrating satisfactory performance during the ‘specified period’ as defined below.
   12. A provision of 5% in addition to the provisions already held, shall be made in respect of accounts restructured under these instructions. Banks will, however, have the option of reversing such provisions at the end of the specified period, subject to the account demonstrating satisfactory performance during the ‘specified period’ as defined below.
   13. A restructuring would be treated as implemented if the following conditions are met:
       1. all related documentation, including execution of necessary agreements between lenders and borrower / creation of security charge / perfection of securities are completed by all lenders; and
       2. the new capital structure and / or changes in the terms and conditions of the existing loans get duly reflected in the books of all the lenders and the borrower.
   14. Post-restructuring, NPA classification of these accounts shall be as per the extant IRAC norms.
   15. The Company shall make appropriate disclosures in their financial statements, under ‘Notes on Accounts’, relating to the MSME accounts restructured under these instructions as per the following format:
       
       

       No. of accounts restructured	Amount (₹ in million)

   16. All other instructions applicable to restructuring of loans to MSME borrowers shall continue to be applicable.
   17. Accounts classified as NPA can be restructured; however, the extant asset classification norms governing restructuring of NPAs will continue to apply.
   18. ‘Specified Period’ means a period of one year from the commencement of the first payment of interest or principal, whichever is later, on the credit facility with longest period of moratorium under the terms of restructuring package. ‘Satisfactory Performance’ means no payment (interest and/or principal) shall remain overdue for a period of more than 30 days. In case of cash credit / overdraft account, satisfactory performance means that the outstanding in the account shall not be more than the sanctioned limit or drawing power, whichever is lower, for a period of more than 30 days.


3. In respect of restructuring plans implemented as per Clause 2 above, asset classification of borrowers classified as standard may be retained as such, whereas the accounts which may have slipped into NPA category between April 1, 2021 and date of implementation may be upgraded as ‘standard asset’, as on the date of implementation of the restructuring plan.
4. In respect of accounts of borrowers which were restructured in terms of the MSME restructuring circulars, the Company shall, as a one-time measure, to review the working capital sanctioned limits and / or drawing power based on a reassessment of the working capital cycle, reduction of margins, etc. without the same being treated as restructuring. The decision with regard to above shall be taken by lending institutions by September 30, 2021. The reassessed sanctioned limit / drawing power shall be subject to review by the Company at least on a half yearly basis and the renewal / reassessment at least on an annual basis. The annual renewal/reassessment shall be expected to suitably modulate the limits as per the then-prevailing business conditions.
5. The above measures shall be contingent on the Company satisfying it that the same is necessitated on account of the economic fallout from Covid-19. Further, accounts provided relief under this policy shall be subject to subsequent supervisory review by the Company and the RBI with regard to their justifiability on account of the economic fallout from Covid-19.
6. Resolution shall be initiated only when a borrower is found to be in stress and puts up a specific request, along with justification of stress due to COVID -19.
7. The Company will carry out necessary due diligence including evaluation of cash flows / income streams of the borrower to establish the necessity of implementing a resolution plan in respect of concerned borrower.
8. The request would be evaluated, necessary documents would be collected and necessary agreement/s would be executed with the borrower and the collateral provided, if any, would be completed as per the resolution plan being implemented.
9. The changes due to implementation of a resolution plan, would be specifically communicated to the borrower, along with the revised repayment schedule.
10. Peerless Finance shall charge a nominal documentation charge, depending upon the matter, just to cover the costs incurred in the resolution process.
11. Managing Director & CEO shall be authorised to receive, verify and approve the resolution plan, redress the grievance of the borrowers and to make necessary accounting entries and / or adjustments and also to take necessary actions, as he may deem necessary and expedient for the interest of the Company.