Fair Practices Code

FAIR PRACTICE CODE

Policy Overview

Document Revision History

Table Of Content

1. INTRODUCTION

1.1 About DJT Microfinance Private Limited

DJT Microfinance Private Limited (DJT MICROFINACE PVT. LTD. or 'the Company') is registered as a Non-Banking Financial Company – Microfinance Institution (NBFC-MFI) under Section 45-IA of the Reserve Bank of India Act, 1934. The Company is classified as a Non-Deposit Taking NBFC and operates under the regulatory framework established by the Reserve Bank of India.

DJT MICROFINACE PVT. LTD. is committed to financial inclusion and empowering underserved communities through responsible Microfinance lending. We adopt the Joint Liability Group (JLG) model, leveraging technology and innovative practices to deliver financial services to women entrepreneurs and low-income households across India.

1.2 Objectives of the Fair Practice Code

This Fair Practice Code has been developed to:

• Ensure fair, transparent, and ethical practices in all dealings with customers
• Enable customers to make informed financial decisions by providing complete, accurate, and timely information
• Build and maintain customer trust and confidence in the institution
• Promote responsible lending and borrowing practices
• Establish robust grievance redressal mechanisms
• Ensure compliance with all applicable laws, regulations, and industry standards
• Uphold the dignity and protect the interests of all customers

1.3 Regulatory Framework

This Fair Practice Code is formulated in accordance with:

• RBI (NBFCs – Responsible Business Conduct) Directions, 2025, RBI/DOR/2025-26/362, DOR.MCS.REC.No.281/,01-01-039/2025-26. (Nov 28, 2025)
• RBI (Master Circular- Fair Practice Code) Directions, 2015, RBI/2015-16/16 DNBR (PD) CC.No.054/03.10.119/2015-16

1.4 Applicability

This Fair Practice Code applies to all Microfinance lending operations of DJT MICROFINACE PVT. LTD. and is binding on all employees, officers, directors, agents, business correspondents, and any other persons acting on behalf of the Company. All customers shall be treated in accordance with the principles and practices outlined in this Code.

1.5 Dissemination

The Fair Practice Code shall be:

• Displayed prominently at all branch offices and premises
• Made available on the Company's website (www.djtmpl.com) in English and Hindi
• Provided to customers in the vernacular language at the time of loan application
• Included in all loan documentation and customer communications
• Communicated to all staff members during induction and regular training programs.

2. SCOPE

The Company shall adhere to the practices and procedures detailed in this Code in order to ensure fair, transparent, and non-discriminatory treatment of all customers across all stages of the Microfinance loan lifecycle – from application and appraisal through disbursement, repayment, and post-loan closure.

This Code covers all loan products offered by DJT MICROFINACE PVT. LTD. under the NBFC-MFI framework and governs interactions with individual borrowers, Joint Liability Groups (JLGs), and all customer-facing operations.

3. TERMS AND DEFINITIONS

Words and expressions used but not defined in this Code shall have the same meaning as assigned to them in the RBI Master Directions, the Companies Act 2013, or other applicable statutes and regulations as amended from time to time.

4. METHODOLOGY OF EXTENDING MICROFINANCE LOANS

4.1 Product Design Philosophy

• All loan products are designed keeping in mind the needs, repayment capacity, and financial well-being of the target customer segment
• Products are simple, transparent, and easy to understand
• No collateral or security deposit is collected from borrowers
• Products are regularly reviewed and refined based on customer feedback and changing needs

4.2 Product Features

• Loan tenure ranges from 12 to 24 months with flexible repayment schedules
• Moratorium between loan disbursement and first instalment: 30–59 days for monthly repayment, ensuring adequate time for deployment of funds
• Complete pre-closure allowed at any time with zero pre-closure charges
• No penalty charges on delayed payments
• Transparent pricing with only three components: interest, processing fee, and insurance premium

4.3 Customer Education

The Company conducts Customer Awareness Programs (CAPs) to educate borrowers about their rights, responsibilities, and the terms of the loan. Field staff are trained to explain all loan features, terms, and conditions in the local language. Customers are provided adequate time to review and understand all documentation before signing.

5. LOAN APPLICATIONS AND PROCESSING

5.1 Application Requirements

• The loan application form clearly indicates the list of documents required
• KYC documents include proof of identity, address, and photograph
• Income and business verification documents as applicable
• Bank account details for loan disbursement

5.2 Application Process

• Applications can be submitted at the branch or during center meetings
• Acknowledgement is provided immediately upon receipt of application
• The acknowledgement mentions the timeframe (10 working days) for loan processing
• Applicants are provided contact details of field staff and branch manager for status inquiries

5.3 Loan Appraisal

• Loan appraisal adheres to RBI guidelines and the Company's credit policy
• Income assessment follows the methodology specified in RBI Directions dated March 14, 2022
• Repayment capacity is thoroughly evaluated considering household income, expenses, and existing obligations
• Credit bureau checks are mandatory for all applicants

5.4 Loan Sanction

Upon approval, a sanction letter in the vernacular language is provided to the borrower. The sanction letter clearly states: loan amount, interest rate, method of interest calculation, tenure, repayment schedule, and all other terms and conditions. Written acceptance of terms and conditions is obtained from the borrower.

6. LOAN APPRAISAL AND TERMS / CONDITIONS

Loan appraisal is conducted in strict accordance with RBI Microfinance Loan Directions, 2025 and DJT MICROFINACE PVT. LTD.'s Board-approved credit policy. The following conditions shall be ensured:

• A thorough household-level cash flow analysis covering income, expenses, and existing loan obligations
• Verification that total repayment obligations do not exceed 50% of monthly household income
• Credit bureau reports are reviewed to assess overall indebtedness
• Field verification of residence and/or business activity
• No borrower shall be a member of more than one Joint Liability Group
• Loan amounts are determined on the basis of borrower need and repayment capacity, not target pressure

All terms and conditions including interest rate, processing fee, insurance premium, tenure, and repayment schedule are clearly communicated and documented before loan disbursement.

7. DISBURSEMENT OF LOANS

• All disbursements are made only at centrally designated locations (branch / center meeting)
• More than one individual is involved in the disbursement function to ensure integrity
• Disbursement is made directly to the borrower's bank account
• Loan card and loan agreement are provided at the time of disbursement
• A copy of the Key Facts Statement (KFS) is furnished to the borrower
• All loan sanctions and disbursements are done only at central locations with involvement of multiple personnel

8. DISCLOSURES IN LOAN AGREEMENT / LOAN CARD

8.1 Loan Agreement Disclosures

The loan agreement clearly states:

• All terms and conditions of the loan
• Pricing as mentioned in the Key Facts Statement
• That no penalty is charged on prepayment or delayed payment
• That no security deposit or margin is collected from the borrower
• Assurance that borrower data privacy will be respected
• Details of the grievance redressal mechanism
• Contact details of the nodal officer, branch, and customer care

8.2 Loan Card

Every borrower is issued a Loan Card containing:

• Borrower's photograph and KYC details
• Complete Key Facts Statement
• All terms and conditions attached to the loan
• Acknowledgement of all repayments and final discharge
• Grievance redressal system details including toll-free number
• Details of any non-credit products offered (with customer consent)

8.3 Changes to Terms and Conditions

The Company shall provide 3 months' prior notice in the local language to borrowers for any changes to terms and conditions, including interest rates, service charges, disbursement schedules, and other deductions. Changes shall be effected prospectively only, except where mandated by regulatory directives.

9. KEY FACT STATEMENT (KFS)

Every borrower is provided a Key Facts Statement (KFS) prior to disbursement. The KFS contains the following disclosures:

• Loan amount (disbursed to borrower)
• Total interest charge during the entire tenure
• Break-up of all upfront charges (processing fee, insurance premium)
• Net disbursed amount (loan amount minus upfront charges)
• Total amount to be repaid by the borrower
• Effective annualized interest rate (computed on reducing balance method using IRR approach)
• Annual Percentage Rate (APR) including all charges
• Loan tenure, repayment frequency, number of installments
• Amount of each installment
• Statement that no penalty is charged on prepayment or delayed payment

The KFS shall be provided in the vernacular language of the borrower and shall form part of the loan agreement.

10. NON-COERCIVE METHODS OF RECOVERY

The Company strictly adheres to non-coercive and dignified recovery practices. The following standards are mandatory for all employees and agents:

• Recovery is made only at the centrally designated place (centre meeting location)
• Field staff may visit the borrower's residence or workplace only if the borrower fails to appear at the centre on two or more successive occasions
• Collection calls are made only between 9:00 AM and 6:00 PM
• No harassment of borrowers, their relatives, friends, or co-workers
• No use of threatening, abusive, or coercive language or behaviour
• No publication or disclosure of borrower names or loan details
• No use of physical force or intimidation
• No providing of misleading information regarding debt or consequences of non-repayment
• Recovery agents (if any) operate under strict supervision and adhere to the same Code of Conduct

The Company is fully accountable for the behaviour of all employees and agents. Penalties are imposed for violations of the Code of Conduct, ranging from formal warnings to termination of employment.

11. GENERAL PRACTICES

11.1 Non-Discrimination

The Company does not discriminate against any customer or applicant on the basis of caste, creed, religion, language, region, gender, age, or any other protected characteristic. All customers are treated with equal respect and dignity.

11.2 Loan Transfer

• In case of a request for transfer of borrower account to another NBFC-MFI, the Company will convey its consent or objection within 21 days from receipt of the request
• Transfer will be as per transparent contractual terms in consonance with applicable laws
• No transfer fees or charges will be levied on the borrower

11.3 Receipt of Payments

• Valid receipts are provided for every payment received from the customer
• Receipts clearly indicate date, amount, loan account number, and purpose of payment
• All payments are promptly updated in the loan account
• Loan card is updated with repayment details

11.4 Force Majeure

The Company shall not be held liable for delays or non-performance of obligations under this Code due to force majeure events including natural disasters, pandemics, government actions, strikes, war, terrorism, or other events beyond the reasonable control of the Company. In such cases, the Company will make reasonable efforts to minimise the impact on customers and resume normal operations as soon as possible.

11.5 Social Responsibility

• The Company is committed to integrating social values into its operations
• A share of profits is ploughed back for the benefit of the communities served
• Corporate Social Responsibility (CSR) activities are undertaken in accordance with applicable laws
• Focus areas include financial literacy, livelihood support, health, and education

12. PRIVACY OF CLIENT INFORMATION

12.1 Data Protection Commitment

• The Company respects and protects the privacy of customer data
• Personal and financial information is kept strictly confidential
• Customer information is used only for legitimate business purposes

12.2 KYC and Anti-Money Laundering Compliance

The Company complies with RBI's Know Your Customer (KYC) guidelines and Anti-Money Laundering (AML) requirements. Due diligence is conducted in accordance with the Prevention of Money Laundering Act, 2002 and RBI KYC Master Directions. Customer identification and verification processes are transparent and non-intrusive.

12.3 Disclosure to Third Parties

Customer information is disclosed to third parties only under the following circumstances:

• Written permission has been obtained from the customer
• The third party is authorized by the customer to obtain the information
• Legal or regulatory requirement mandates disclosure
• Customary practice among financial institutions on a reciprocal basis (e.g., credit bureaus as per the Credit Information Companies (Regulation) Act, 2005)

12.4 Data Security Measures

• IT systems have password protection with clearly defined role-based access rights
• Physical and electronic records are securely stored and accessible only to authorised personnel
• Data access is restricted on a need-to-know basis
• Staff members (current and former) are bound by confidentiality and non-disclosure obligations

For detailed privacy safeguards, refer to DJT MICROFINACE PVT. LTD. Privacy Policy (Reference No. DJT/POL/PP/V2.0).

13. GRIEVANCE REDRESSAL MECHANISM

13.1 Introduction

DJT MICROFINACE PVT. LTD. is committed to providing excellent customer service and ensuring timely resolution of all grievances. The Company has established a comprehensive Customer Grievance Redressal Mechanism (CGRM) with multiple channels for customers to register complaints and seek redressal.

13.2 Grievance Classification

Customer communications are classified into three categories:

• Complaints: Issues requiring investigation and resolution (e.g., incorrect charges, staff misconduct, documentation errors)
• Service Requests: Requests for services related to existing loans (e.g., loan statement, NOC, duplicate loan card)
• Queries: Information requests about products, processes, or loan status

13.3 Grievance Redressal Channels

13.4 Grievance Resolution Process

• All complaints are acknowledged immediately upon receipt
• Each complaint is assigned a unique tracking number
• Complaints are investigated thoroughly and impartially
• Regular updates are provided to the customer on status
• Resolution is communicated in writing to the customer
• Customer feedback on resolution is actively sought

13.5 Monitoring and Reporting

• Monthly CGRM reports are prepared and reviewed by senior management
• Quarterly summary of complaints is presented to the Board of Directors
• Key Performance Indicators (KPIs) are monitored: percentage of cases resolved, average resolution time, customer satisfaction
• Root cause analysis is conducted for recurring complaints
• Systemic improvements are implemented based on complaint trends

14. INTEREST RATE AND PRICING

14.1 Interest Rate Framework

• Interest rates are determined based on cost of funds, margin, and risk premium
• Current interest rate range: Minimum 25%, Average 26%, Maximum 27% per annum
• Interest is calculated on reducing balance method
• Effective interest rate is disclosed in the Key Facts Statement
• Minimum, maximum, and average interest rates are prominently displayed at all branch offices and on the Company's website

14.2 Transparency in Pricing

• All charges are clearly disclosed in the Key Facts Statement
• Annual Percentage Rate (APR) including all costs is provided to every borrower
• No hidden charges or fees
• Interest rates and all charges are displayed at all branches and on the website

15. ENGAGEMENT OF RECOVERY AGENTS

Where the Company engages recovery agents, the following conditions shall apply:

• Recovery agents are engaged only as a last resort and under strict oversight
• All recovery agents shall be required to adhere to the Company's Code of Conduct and this Fair Practice Code
• Recovery agents shall not employ any coercive, abusive, or threatening tactics
• The Company is fully accountable for the actions of recovery agents engaged on its behalf
• Recovery agents shall carry authorisation letters identifying them as agents of DJT MICROFINACE PVT. LTD.
• Collection activities are permitted only between 9:00 AM and 6:00 PM
• The Company shall maintain a list of recovery agents and make it available to customers on request

16. RESPONSIBILITIES FOR OUTSOURCING ACTIVITIES

Where the Company outsources any activity to a third party, the following responsibilities and safeguards shall apply:

• The Company retains full accountability for all outsourced functions
• Service Level Agreements (SLAs) shall clearly define the scope, standards, and compliance obligations of service providers
• All outsourced entities handling customer data shall be bound by confidentiality and data protection obligations
• Third-party service providers shall comply with applicable RBI guidelines on outsourcing
• Regular monitoring and audit of outsourced activities shall be conducted
• The Company shall have the right to audit outsourced entities and their compliance with contractual obligations
• Outsourcing arrangements shall not dilute the quality of service provided to customers

17. AVOIDING OVER-INDEBTEDNESS

17.1 Assessment of Repayment Capacity

• Thorough due diligence is conducted to assess the income and repayment capacity of each borrower
• Cash flow analysis includes assessment of household income, business income, family expenses, and existing liabilities
• Verification visits are conducted to the borrower's residence and/or business place
• Credit bureau reports are obtained and reviewed for all borrowers

17.2 Household Indebtedness Limits

In compliance with RBI guidelines, the Company ensures that:

• The total loan repayment obligations of a household (including all existing loans and the proposed loan) shall not exceed 50% of the monthly household income
• This calculation includes both principal and interest components of all loans
• All types of loans (collateral-free and collateralized) are considered in this calculation

17.3 Responsible Lending Practices

• No borrower shall be a member of more than one Joint Liability Group
• Loan amounts are determined based on the borrower's need and repayment capacity, not on the pressure to meet targets
• Staff incentives are structured to reward portfolio quality and customer satisfaction in addition to business growth
• The Company monitors area-level indebtedness and avoids operating in areas with excessive debt burden

18. INTERNAL CONTROL SYSTEM

18.1 Organisational Structure for Compliance

• The Board of Directors has overall responsibility for ensuring compliance with this Fair Practice Code
• Designated compliance officers at the Head Office and Regional Offices oversee implementation
• Branch Managers are responsible for branch-level compliance
• Internal Audit department conducts regular compliance audits

18.2 Internal Audit and Inspection

• Regular internal audits are conducted to verify compliance with the Fair Practice Code
• Branch inspections include review of Complaint Registers and resolution status
• Mystery shopping exercises are conducted to assess customer experience
• Third-party audits may be commissioned for independent assessment

18.3 Staff Training and Awareness

• Comprehensive induction training for all new employees covering the Fair Practice Code and customer protection
• Regular refresher training programs on fair practices and ethical conduct
• Annual certification by all staff members on adherence to Code of Conduct
• Training effectiveness is monitored through assessments and field observations

18.4 Accountability and Penalties

• The Company is fully accountable for the behavior and actions of all employees and agents
• Violations of the Fair Practice Code or Code of Conduct result in disciplinary action
• Penalties range from warnings to termination depending on the severity of the violation
• Serious violations (harassment, fraud, misrepresentation) result in immediate action

18.5 Customer Satisfaction Monitoring

• Annual Customer Satisfaction Surveys are conducted by independent agencies
• Exit interviews are conducted with borrowers who exit/drop out
• Feedback is analyzed and used for product development and process improvement
• Survey results are shared with the Board of Directors

19. COMPLIANCE REVIEW

19.1 Periodic Review

• This Fair Practice Code shall be reviewed at least annually by the Board of Directors
• Review shall consider regulatory changes, industry best practices, customer feedback, and operational experience
• Compliance reports and customer satisfaction surveys shall be reviewed as part of the annual review process

19.2 Continuous Improvement

The Company is committed to continuous improvement of its fair practices. Feedback from customers, staff, regulators, and other stakeholders is actively sought and incorporated. The Company strives to be a leader in customer protection and ethical business practices in the Microfinance industry.

20. AMENDMENT

This Code will be reviewed by the Board as and when required. Any amendments to this Code require Board approval. Amended versions shall be communicated to all stakeholders, displayed at all branches, and published on the Company's website. All staff shall be trained on the amended provisions.

Notwithstanding the above, this Code will stand amended to the extent of any change in applicable laws, including any amendment to RBI Master Directions on Microfinance Loans or other applicable regulations, without any further action from the Company unless a specific Board resolution is required under applicable law.

21. ACKNOWLEDGMENT AND COMMITMENT

DJT Microfinance Private Limited acknowledges its responsibility to conduct business in a fair, transparent, and ethical manner. The Company is committed to:

• Upholding the highest standards of integrity and professionalism in all dealings with customers
• Treating all customers with dignity, respect, and fairness
• Ensuring complete transparency in pricing, terms, and conditions
• Protecting customer privacy and maintaining confidentiality of information
• Providing timely and effective grievance redressal
• Preventing over-indebtedness and promoting responsible lending
• Complying with all applicable laws, regulations, and industry standards
• Continuously improving our practices based on feedback and learning

This Fair Practice Code represents our commitment to our customers and the communities we serve. We invite all stakeholders to hold us accountable to these standards.

For and on behalf of

DJT Microfinance Private Limited