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FAIR PRACTICE CODE

 

1. PREAMBLE

1.1This Fair Practices Code, based on Guidelines on Fair Practices Code for NBFCs issued by the Reserve Bank of India and voluntarily formulated by Ahalia Money Exchange & Financial Services Private Limited (hereinafter referred to as the Company) aims to provide to all concerned an effective overview of the practices followed by the Company in respect of the various facilities and services offered by it to its Customers, thereby enabling them to take informed decisions.

1.2 It is expected that this fair practice code will act as a benchmark service standard in the dealings of the company with its individual customers.

1.3 The code not only details the obligations that the company undertakes but also guides its staff in properly dealing with the customers.

1.4 More over the code is expected to help the customers in knowing their rights and also measures they should take to protect their interests.

1.5 The company adopts this code and places it on its website and makes copies available to customers on demand at all its branches.

2. Effective date

The Code shall come into effect from July 15, 2014.

3. FORCE MAJEURE:

The Fair practice code is applicable under the normal operating environment only and not applicable in the event of Force Majeure.

4. KEY COMMITMENTS:

The companys key commitments to the customers are:

4.1. Act fairly and reasonably while dealing with our Customers by ensuring that:

a. Services offered are in line with the standard procedures and practices.

b. Our products and services meet the rules & regulations of the land.

c. Our dealings rest on ethical principles of integrity and transparency.

d. We provide secure and reliable services.

e. The instances of financial difficulties are dealt with sympathetically and with positive perspective.

f. We do not engage in any unlawful or unethical consumer practice.

4.2. Help customers understand our Products and Services by:

a. Ensuring provision of complete information about our Products & Services in English, and in vernacular language as understood by the customers.

b. Providing all related information in person at the time of establishing customer relationship.

c. Understanding customer needs and offering the product / service in line with customers needs.

4.3. Deal efficiently and effectively with the customer queries / complaints by:

a. Providing necessary guidance on products & services and rights & responsibilities of the customer

b. Offering channels for customers to route their queries

c. Listening to the queries/complaints patiently

d. Accepting the mistakes of the company, if any.

e. Correcting mistakes / implementing changes to address such queries/complaints.

f. Communicating the response of the company promptly to the person(s) concerned

g. Telling customers how to take their complaint forward if they are not satisfied with the response

4.4 Publicize this Fair Practice Code, by making it available for public access on our website and make copies available at branches on demand.

5. APPLICATION OF THE CODE

The Fair Practice Code applies to the following products and services offered by branches or by other delivery channels

5.1. Loan Products including providing information regarding Documentation Requirements, Interest& penal interest rates and Associated Charges.

5.2. Foreign Exchange Services including providing information regarding Documentation Requirements, Exchange Rates & Associated Charges.

5.3.Inward/Outward remittances, Travel Currency Cards and all other utility services such as Ticketing, Pan card services, Passport services, Visa services etc including providing information regarding security measures and Commissions levied by the company.

5.4Any other Third Party products offered by the company Insurance, X-pay, m-pesa etc.

5.5The covenants of this code will supplement and will not replace various other policies and guidelines issued by the company from time to time

6. INFORMATION

6. A.Product Information:

6.1 A prospective customer would be given all the necessary information on the range of loan products available with the company to suit his / her needs.

  1. The Customer would be explained the key features of our products including applicable fees and charges advising what information/documentation are needed.
  2. We help the public in every possible way to choose products and services, according to their needs.

6.4 on exercise of choice, the customer would be given the relevant information about the loan product he/she had chosen.

6.5 The Customer would be explained the processes involved till sanction and disbursement of loan and would be informed of timeframe within which all the processes will be completed ordinarily.

6.6 The Customer would be informed the procedure involved in servicing and closure of the loan taken.

6. B.Terms and Conditions for Lending:

6.7 before lending money to the customer, renewing the existing facility or sanctioning increase in the existing facility, the company will make its own assessment of the customers ability to repay the loan / borrowings

6.8 The loan delivery system of the company is guided by the Loan Policy adopted by the company and approved by its Board

6.9 The company would ordinarily give an acknowledgement of receipt of loan request if demanded by the customer, and get a copy of the terms and conditions duly acknowledged by the party, as soon as the customer chooses to buy a product.

6.10 Immediately after the decision to sanction the loan, the company if demanded would show draft of the documents that the customer is required to execute and would explain, the relevant terms and conditions for sanction and disbursement of loan.

6.11 Loan Application forms; Draft documents or such other papers to be signed by a customer shall comprehensively contain all the terms and conditions relating to the product or service of his choice.

6.12 Reasons for rejection of loan applications would be conveyed to all borrowers

6.13 before disbursement of loan and on immediate execution of the loan documents, the company shall deliver a copy of the documents to the customers.

7. Policy on KYC, Appraisal, Insurance, Storage of Securities, Auction etc.

The Company shall put in place a policy duly approved by the Board covering the following aspects:

  1. Adequate steps to ensure that the KYC guidelines stipulated by RBI are complied with and to ensure that adequate due diligence is carried out on the customer before extending any loan/service.
  2. Proper appraisal procedure for jewellery accepted as collateral security.
  3. Declaration shall be obtained from the borrower confirming ownership of gold jewellery.
  4. All branches shall have proper storage facility of either Strong Rooms or Safes conforming to ISI Standards of approved make to store the jewellery in safe custody.
  5. The keys to the strong room/safe shall be held separately by two officials and the operations thereof shall be under effective joint custody
  6.  The staff shall be imparted training on a continuous basis to ensure that the guidelines covering security issues are strictly adhered to.  
  7.  The gold items shall be periodically inspected by the internal auditors to ensure quality,   quantity and proper storage
  8. The jewellery accepted as collateral security shall be appropriately insured.
  9. The auction procedure in case of non repayment shall be transparent.
  10. Prior notice to the borrower shall be given before the auction and there shall not be any conflict of interest.
  11. The auction process shall ensure that an arms length relationship in all transactions during the auction is maintained including with group companies and related entities.
  12. The auction will be only through auctioneers approved by the Board and the Company shall not participate in the auction.
  13. The auction shall be announced to the public by issuing advertisements in at least two newspapers, one in vernacular language and the other in a national daily newspaper.
  14. Any fraud in the functioning of the Company shall be enquired into by the appropriate authority and suitable punitive measure shall be taken by the appropriate disciplinary authority.

  1. The amount due to the Company by the Customer, being the aggregate of the principal and the up to date interest as well as other expenses like expenses for conducting auction, will be adjusted against the sale proceeds.
  2.  Whereas, the surplus, if any available, will be refunded to the customer, deficit if any shall have to be paid by him / her.
  3.  If at any time after the loan is granted, the Company has reasons to believe that a Customer has obtained loan through misrepresentation of facts and has failed to repay the loan with interest on demand, the Company shall not be bound to follow the above procedures but shall be at liberty to sell / auction the Gold Ornaments pledged by him / her in the manner deemed appropriate under the  prevailing circumstances/laws

7. .TARRIFF (Fees / Charges /Interest)

      7. A.INTEREST RATES

  The rate of interest applicable to various products are arrived at by the Finance Dept, taking in to account various parameters involved such as cost of funds, overheads, risk premium etc and the documented working is available with the Department

7.1. A customer may find our Interest Rates through Branches

  1.  A customer may find our  Interest Rates at Our website

7.3 At the time of availing of a loan, we will provide the customer with information on the rate of interest applied to the customers accounts

7.4  When interest will be paid on the account

7.5 When interest will be debited to the account (in case of loan account)

7.6 We will also provide customers with information such as web site address, and will explain how interest is applied to the customers account.

7.7 Interest will be calculated in accordance with general accounting practices applicable to major financial institutions.

7.8 The Company shall ensure that changes in interest rates and charges are effected only prospectively

       7.B CHARGES

7.8 We will make available any charges applicable to products and services applicable at the time a customer signs up for the same.

7.9 A customer can also inquire about charges that are applicable to his / her Account at -Branch counters and website

7.10 If we increase any charges or introduce a new charge, it will be effected on prospectively only except in case of changes due to regulatory requirements if any.

7.11We will provide details charges for any service at anytime on demand



8. Marketing Ethics

8.1 Field Personnel Our sales representatives will identify themselves when they approach you for selling our products.

8.2 We have prescribed a code of conduct for our Marketing staff whose services we may avail to market products.

8.3 In the event of receipt of any complaint from you that our representative has engaged in any improper conduct, we shall take appropriate steps to redress the complaint.

8.4 Telemarketing:  If our telemarketing staff/agents contact you over phone for selling any of our products or with any cross sell offer, the caller will identify himself/herself and advise you that he/she is calling on our behalf.

9. Account Operations

9.1 A duly authenticated receipt/acknowledgement voucher will be provided to all customers for all the transactions with us.

9.2 In the event of non-receipt of this voucher, we expect the customer to the higher authorities of the company or the Grievance redressal officer.


10. Confidentiality of Account Details

  1.  We will treat all your personal information as private and confidential (even when you are no longer a customer). 
  2.  We will not reveal transaction details of your accounts to a third party, including entities in our group, other than in the following four exceptional cases when we are allowed to do so.
  3. If we  have to give the information by law
  4. If there is a duty towards the public to reveal the information
  5. If our interests require us to give the information (for example, to prevent fraud) but we will not use this as a reason for giving information about you or your accounts (including your name and address) to anyone else, including other companies in our group, for marketing purposes
  6. If you ask us to reveal the information, or if we have your permission to provide such information to our group/associate/entities or companies when we have tie-up arrangements for providing other financial service product
  7. The term 'Third party' excludes all Law enforcement agencies, Credit Information Bureaux, and Reserve Bank of India.

11. Collection of dues

Our dues collection policy is built on courtesy, fair treatment and persuasion.  We believe in fostering customer confidence and long-term relationship.  Our staff or any person authorized to represent us in collection of dues or/and security repossession will identify himself/herself and interact with you in a civil manner. We will provide you with all the information regarding dues and will give sufficient notice for payment of dues. Our staff/agents are governed by Guidelines for Collection of Dues and Repossession issued by Reserve Bank of India.

12 Redressal of Grievances

  1. We have a Grievance Redressal officer within the organization. If you want to make a complaint, we will tell you how to do this and what to do if you are not happy about the outcome. Our staff will help you with any queries you have.
  2.  Details of our Grievance Redressal officer is displayed on our website and at all our branches. 
  3.  The timeframe for responding to your complaints and escalation process etc. are also displayed on the website.
  4.   If the complaint / dispute is not redressed within a period of one month, the customer may appeal to the Officer-in-Charge of the Regional Office of Department of Non-Banking Supervision (DNBS), Reserve Bank of India, Bakery Junction, Thiruvananthapuram

13. GENERAL

13.1 The Company shall refrain from interfering in the affairs of the borrower except for the purposes provided in the terms and conditions (unless new information, not earlier disclosed by the borrower, has come to the notice of the Company).

  1.  In the matter of recovery of loans, the Company shall not resort to undue harassment /coercion.
  2.  A periodical review of the Fair Practices Code and functioning of the grievances re dressal mechanism at various levels of management would be undertaken by the Company at regular intervals and a consolidated report of such reviews shall be submitted to the Board of Directors.

 

 

 

GREIVANCE REDRESSAL OFFICER

 

 

Mr.V.S.Jayaram

 

 

Ahalia Money exchange and financial services PVT LTD

 

 

1st floor, SSS Plaza

 

 

Palakkad Road Kizhakkumpattukara

 

 

East Fort P.O

 

 

Thrissur-680 005

 

 

Mobile: 9496028326

 

 

phone: 0487-2434905 (Dir), 0487-2434900

 

 

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

 

 

____________________________________________

 

 

If the complaint/dispute is not redressed within one month, the customer may appeal to.

 

 

The Officer in-charge

 

 

Reserve Bank of India

 

 

Department of Non Banking Supervision

 

 

Bakery junction

 

 

P.B.NO 650

 

 

Thiruvananthapuram-695 033.

 

Loan Policy

INTRODUCTION.

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

BROAD POLICY OBJECTIVES.

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

SPECIFIC IMMEDIATE GOALS OF THE CURRENT POLICY.

While seeking to accomplish the aforesaid broad objectives, the current loan policy aims at specific immediate goals, viz.:

  • sustained portfolio growth within the limit placed by the RBI-prescribed capital adequacy norm such growth to be achieved steadily in terms of the average volume of the portfolio,
  • renewed emphasis on the relatively diversified, low-risk, high-yielding retail lending, and a rapid expansion of such lending through a range of loan products designed to meet specific borrower categories and requirements, especially in Kerala, ;
    • greater stress on improving the quality of the portfolio and enhancing the return thereon through more careful appraisal and selection of borrowers and more effective credit management; and
    • to attract and retain better-quality and lower-risk business by offering competitive rates of interest, while also ensuring that rates yields a satisfactory return on the portfolio as a whole;
    • continued and concerted efforts toward containing portfolio delinquencyby maximizing recovery efforts to contain NPA and overdues at comfortable levels.:

LOAN PRODUCTS

Our loan products now in activation are gold loans,Ahalia Loan against property (ALAP).Ahalia Personal Car Loan)APCL) and Personal Loans to employees in group companies. The products are tailor made customer friendly products with competitive interest rates suitable to different sections of borrowers. All products were subjected to risk vetting by our external auditor cum NBFC consultant and approved by Director Board. Market studies are being made to compare the merits and defects with similar products of our competitors and corrections are made to increase the acceptability. Terms and conditions are reviewed periodically and refinement made to meet the additional threats observed in operations.Appraisal, processing and approval of different products are described below.

PENAL INTERESTS

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

A).   For schemes GR-01 to GR-10 & QM-01 penal interest are worked out to be 2.5% up to 3 months,4% upto 6 months,5.5% upto9 months & 7.5% beyond 9 months.
B).   Schemes GR-11 :- 4% for the entire overdue.
C).   EMI schemes :- 2.5% for the defaulted EMI & 4% on the loan outstanding beyond due date-monthly compounding.
D).   Property Loan :- Penal Interest on defaulted EMIs & for loan outstanding beyond loan period @ 3% is charged.
E).   Travel Loan :- Penal Interest is charged@0.25% per month on defaulted EMIs + on loan outstanding beyond loan period.

GOLD LOANS

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

We have formulated different GL products suitable to various sections of borrowers and they can opt for the product of their choice. Interest rates are very competitive in comparison with the rates of other NBFCs and are fixed based on cost of funds, risk profile and a very reasonable profit margin. Interest rates vary from 15% to 21% based on loan tenure,LTV.IRR based on RBI guidelines. Interest rates and penal interest rates of GL products except EMIGL are simple interest. Interest rates and penal interest rates are being published in the Fair Practice Code under preparation in vernacular in our website instead of the FPC in English with interest rates now available in website .For insulating various risks the following steps are taken.

  • Strict compliance of KYC/AML norms
  • Strict quality ckeck.Purity analyzer machine installed in all branches.
  • System enabled to allow lower lending rates proportionate to purity.
  • Auditing & appraisal of gold pledged monthly.
  • Gold pledged kept in tamper proof sealed pouches after appraisal by auditor in strong safe under double lock(operated by 2 joint custodians)to prevent foul play.
  • For ornaments with stones/impurities/fillings/more decorative works/more joints lending rate is to be reduced to 90% of the normal lending rate of that day applicable to the loan scheme after making provisions for extraneous matter in the ornaments.
  • Stand alone pledge of ornaments weighing below 1 gm prohibited unless it is a part of total ornaments pledged.
  • Total individual liability under gold loan is restricted to Rs 12 Lakhs in software (except in AFSGR-04) and for exceeding the limit in genuine requirements prior approval from NBFC Head is to be taken.
  • Review of overdue on a daily basis.
  • Sending notices to defaulters and auction formalities centralized.
  • Conducting auctions as and when overdue/NPA increases to discomfort levels complying with all guidelines issued by RBI for conducting auction such as due notice giving reasonable time to borrower for repayment, paper publication, conducting auction at the respective taluks etc.RBI has instructed to allow 21 days. We are givng 7 days in 1st notice, further 7 days for the 2nd registered A/D notice and 15 days for the 3 rd Auction Notice(Regd A/D)
  • Penal provisions for irregularities/violations/non-compliance.
  • Reporting defaulters details to CIBIL.

Branch can grant loans up to Rs 12 Lakhs to one individual in different products subject to maximum limit prescribed for that product.Beyond Rs 12 L branches have to obtain prior approval from NBFC Division

Merits of our schemes

  • Most Competitive interest rates.
  • Simple interst is charged except in EMIGL schemes.
  • Penal interest rates are very low.
  • Minimum interest for 5 days only.
  • Nominal admn charges at Rs 10/- per account.
  • Insurance charges not collected
  • Very transparent without hidden charges,
  • Schemes are flexible. Deviation in amount and lending rates possible with prior approval from HO subject to maximum LTV of 75% prescribed by RBI.
  • Compromise settlements permitted by HO in eligible cases.
  • Borrower can choose the scheme best suited to him.
  • Pledged items are having insurance coverage
  • Partial release of pledged items is allowed remitting the equivalent amount.
  • AQMGL is a best scheme suitable for borrowers whose requirements vary from time to time. He can avail the amount required and repay the same when he need no more funds for the time being. Interest will be calculated for actual number of days when he has utilized the funds. When he needs funds again he can come avail the required amount within the limit without hacing the hazzles of a fresh loan.
  • EMIGL is best suited for persons with regular monthly income. Interest rates are lower..The loan can be repaid in 12-to-36 easy instalments.

Ahalia Loan Against Property(ALAP)

The reduction of LTV to 60% for gold loans sanctioned by NBFCs recommended by Rao committee and approved by RBI in 2013 had serious impact on our GL business due to high LTV offered by banks, co-operative banks etc .So we were forced to diversify our activities to other areas with reasonably good returns. Loans against property and vehicle loans were identified as potential areas. So we launched ALAP and APCL (car loans)in Dec 2013.Our decision is to approve cases very very selectively since the recovery measures such as DRT,SARFAESI ACT etc are not available to us in case of delinquency of the loan. Branches have to identify the customer and send leads to HO and the entire process of appraisal, processing, approval, documentation and disbursement are managed hy NBFC team at HO headed by a Senior Manager stationed at HO.Approval is to be done by a core committee consisting of Head/NBFC.Finance Manager and a Director for loans up to Rs 25 Lakhs and loans beyond Rs 25 Lakhs are to be approved by the Director Board.Norms,terms and conditions for ALAP are:

  • Loan amount normally limited to Rs 25 Lakhs
  • Period & repayment : up to 60 months in 60 Equated Monthly Installments)
  • Interest rate: 19.75%(Monthly compounded on daily diminishing balance)
  • Processing fee: Rs 2500/-
  • Valuation fee & legal fee: As applicable; which we have fixed as Rs 1500/-each for the time being.
  • Penal Interest: 3% on defaulted EMIs and on the balance outstanding beyond loan period
  • LTV: 50%-Security value should be double the loan amount.
  • Income: EMI of ALAP & other monthly loan repayment obligations should be within 50% of the monthly income supported by pucca income proof.
  • Security should be owned and occupied by the applicant.
  • Spouse has to join as co obigant.
  • CIBIL check to verify the track record and to ascertain the existing loan repayment obligations
  • Valuation of property by valuers approved by banks.
  • Legal opinion by our approved advocate.
  • Arbitration clause included in loan agreement to ensure speedy decree.
  • Follow up & sending notice by ALAP team at HO.
  • Auditing by our Audit Team and approved external auditors.
  • Reporting defaulters to CIBIL
  • Compromise settlements in deserving cases.
  • Legal action in other NPA or irregular accounts after serving recall notice followed by legal notice giving 15 days time for regularization/settlement.

Ahalia Personal Car Loan(APCL)

We have also decided to consider car/2 wheeler loans very selectively mainly to employees of our group concerns.Details.terms and conditions are as under:

  • Loan amount up to Rs 10 Lakhs
  • Period up to 48 months. to be repaid by 48 EMIs
  • LTV: 90% (Cost of vehicle excluding road tax and insurance)
  • EMI of the loan plus other monthly repayment obligations should be within 50% of monthly income supported by pucca income proof.
  • Co-obligancy of spouse for public and co-obigancy of a colleague for Ahalia staff
  • CIBIL check for public.
  • Interest rate: 17.75% for public and 17.25% for Ahalia Staff members monthly compounding on the daily diminishing balance.
  • Penal interest @ 3% on defaulted EMIs and on loan amount outstanding beyond loan period.
  • Direct payment to the dealer directing to add our name as financiers and our lien on the vehicle in RC
  • Comprehensive insurance policy with clause of our name as financiers.
  • Inspection of the vehicle & RC & Ins policy after registration and copies filed ensuring our charge in RC and insurance policy.
  • Documentation by NBFC/HO and execution & disbursement by branch.
  • Follow up by branch & HO.Notices to be sent by ALAP team in HO.
  • If irregular or NPA send recall notice and initiate legal action.
  • Notify the default to CIBIL.

AUDIT

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

Penal Provisions:

It is appropriate to initiate penal action in the cases of commission of irregularities/non=compliance/violation/negligence/recurring omissions to protect our health and reputation. Violation of RBI directives is a serious irregularity. Various circulars are repeatedly issued and training sessions are conducted to make the employees aware of the seriousness of the audit comments. Lack of generation of sufficient revenue is also a serious lapse. For these irregularities/lapses/violations and non-compliance appropriate penalty is to be decided by the committee of Senior Executives and Audit Head and approved by Director Board.

Compliance:

In the present situation compliance of companys norms, statutory regulations and regulatory directions are equally or more important than growth, profitability and non-compliance will be very seriously viewed by the authorities. In order to ensure proper compliance Finance Manager is designated also as Chief Compliance Officer of the company. Each department should have a compliance officer which may be nominated by HR dept.At branches Branch Heads should act as compliance officer. Their duties are to ensure compliance, take corrective actions for non-compliance and report serious cases of non-compliance to CCO and seek his advice and act accordingly.

Incentives

Campaigns and incentives are a vital part of the promotion process to energize and motivate and improve performance levels. We are giving incentives on a regular basis for some products and for launching a new product or for promotion of a particular product. Special incentives are announced by Director Board to boost business. A well defined clarified incentive policy may be evolved for NBFC products, FFMC products, Housekeeping, Not having audit comments, Rectification of audit comments, recovery of overdues, attaining business targets etc in a meeting of Senior Executives and Audit Head subject to approval by Director Board.

Auctions

We follow a Board approved Auction Policy to conduct auction of Gold pertaining to defaulted loan accounts ; as well as all other RBI guidelines in this regard Auction is always conducted at the same Taluk/District where the loan in question is granted . Auction is monitored by a third party auctioneer duly approved by the board. Auction is followed by duly serving notices to the given addresses of the pledgers and publication of the matter in two news papers.


ANTI- MONEY LAUNDERING (AML) GUIDELINES AND KNOW YOUR CUSTOMER (KYC) PROCEDURES

2016


Money Laundering is a type of financial crime that poses greater risk and challenges to the financial sector. It can be called a process by which money or other assets obtained as proceeds of crime are exchanged for clean money or other assets with no obvious link to their criminal origins. It involves the processing of criminal proceeds in order to disguise their illegal origin.

Money Laundering often requires the usage of the products and the delivery channels offered by the financial sector and disrupt the financial stability, as it can lead to severe disturbances in the normal social life. Increasing instances of money laundering and the growing vulnerability of the financial sector in the process makes it imperative for the players in the financial markets, such as banks and money exchange companies, to guard themselves against the menace of money laundering. Internationally, it is increasingly being recognized that money exchange sector is also susceptible to the money laundering schemes like other sectors such as banks, mutual funds etc. This is because of the fact that the money exchange products also offer the stored value similar to the banking products in certain cases.

Money Laundering is the process of concealing financial transactions to make illegitimate money, derived from illegal activities such as embezzlement/ corruption/ illegal gambling/ terrorism/ organized crime, appear legitimate. Its main objective is to hide the true source of illegal proceeds and make them legally usable, by converting them into legitimate money through a series of financial transactions. Technological advancements have helped money launderers adopt innovative means to transfer funds faster across continents making detection and preventive action more difficult. The attempted misuse of the financial system for perpetration of frauds has been recognized globally as a major problem that needs to be continuously tackled at every level in a dynamic manner.

2. PREFACE


Anti-Money Laundering (AML) is a term mainly used in the financial and legal industries to describe the legal controls that require financial institutions and other regulated entities to prevent or report money laundering activities.

Today, all financial institutions globally are required to monitor, investigate and report transactions of a suspicious nature to the financial intelligence unit of the Central Bank in the respective country. For example, a financial institution must perform due diligence by having proof of a customers identity and that the use, source and destination of funds do not involve money laundering.

Managing money laundering requires the coordinated approach among the financial services, regulatory authorities and the law enforcement agencies all supported by an appropriate statutory framework. The financial institutions as the players in the industry are impacted by the money launderers operations and require a systematic framework to counter these vulnerabilities.

Ahalia Money Exchange & Financial Services Private Limited in accordance with the circulars and regulations issued by the Reserve Bank of India and applicable international standards in this regard has put in place systems and procedures to combat money laundering and identification of suspicious activities. The objective of the same is to ensure that transactions routed through the company never become a cause for disguised criminal activities or are the routes of organized crime.

INTRODUCTION

Financial sector in the 21st century, including money exchange companies, faces serious threats of the white-collar crimes that are happening within the sector. These crimes are unlike the traditional crimes and often take place intelligently without leaving any trial for tracing the crime. Financial crime cost a lot to the financial institutions in particular and to the society at large.

Internationally, money laundering has been considered as a threat to the national security and economic activity as it is often associated with the financing of terrorism and also evasion of taxes. This increases the attention of the regulatory and statutory authorities to prescribe guidelines/rules to ensure that the financial sector does not contribute to the money laundering process either intentionally or unintentionally. Compliance with this statutory/regulatory provision is, therefore, a key challenge to the financial sector in the present scenario.

Compliance with the statutory/regulatory provisions requires clear understanding of the regulations in the true spirit and the nature and depth of the menace that the regulations are trying to curb. It is therefore necessary that the players in financial markets should understand the concept of money laundering in general and try to analyze the framework that needs to be adopted within the entity to ensure that the products and channels offered by them do not become vehicles to the money launderers.

OUR GOAL

As a proactive and responsive company, Ahalia Money Exchange and Financial Services Pvt. Ltd. consider it our moral, social and economic responsibility to prevent the misuse of the financial system for laundering proceeds of criminal activities and to coordinate the global war against money laundering. Our role in curbing this global reality begins with stringent Know Your Customer procedures. Imbibing the true spirit behind the international financial communitys resolve to fight money laundering, Ahalia Money Exchange and

Financial Services Private Ltd. has resolved to conduct day - to - day business with due skill, care and diligence and seek to always comply with both the letter and spirit of relevant laws, rules, regulation, codes and standards of good practices. In the light of the guidelines received from Reserve Bank of India and based on earlier experiences by the financial community, a standardized and uniform policy framework has been adopted to ensure appropriate customer identification and monitoring of unusual/ suspicious transactions on an ongoing basis. We prohibit all payments of remittances to charitable and religious organizations and trade related remittances.

With more emphasis as disclosed in the preface to Anti-money Laundering and combating terrorism activities, Ahalia Money Exchange & Financial Services Private Limited strives its best efforts in designing and implementing the internal policies and continuous staff training so that the movement of funds through this organization does not culminate in financing the harmful activities which impose severe threat to the humanity as a whole.

We look into a transparent business environment in which both the service to the customer and compliance with the regulations on high esteem as well as extending all supports by way of compliance on regulations issued by RBI.

The directives issued by the RBI is updated and implemented throughout the entire team of the organization and periodical checks are made as to whether the same is being adhered to or not. Being committed to the highest level of transparency in transactions, we have developed systems and procedures to monitor all the transactions for any suspected money laundering activities.

The manual describes an outlook into the policies and procedures designed by us, keeping in mind the regulations and how the system works in order to curb the activities associated with Anti-money laundering activities, prevention of organized crimes etc.

The manual gives in detail the entire policies and procedures followed by the company as regards the Anti-money laundering compliance, broadly classified under the major heads like Know Your Customer, handling transactions, documentation, monitoring and control, reporting suspicious transactions, Legal position and obligation and guidelines to identify suspicious transactions.

Know Your Customer Policy Key elements

The objective of this policy is to prevent the Company (AMEFS) from being used, internationally or unintentionally, by criminal elements for money laundering activities. This policy also enables Ahalia Money Exchange & Financial Services Private Limited to know/understand their customers and their financial dealings better which in turn help them to manage their risk prudently.

The policy shall consist of four key elements

A. CUSTOMER ACCEPTANCE POLICY (CAP):

No transaction is conducted in anonymous or fictitious/binami names and also to ensure that the identity of the person does not match with any person with known criminal background or with banned entities such as individual terrorists or terrorist organizations etc.

Documentation requirements and other information to be collected in respect of different categories of customers depending on perceived risk and keeping in mind the requirements of Prevention of Money Laundering Act, (PMLA), 2002,as amended by Prevention of Money Laundering (Amendment) Act, 2009 and guidelines issued by Reserve Bank of India.

Not to undertake any transaction unless the customer submits the identity or document as per the classification.

To have built in safeguards to avoid customer harassment and not too restrictive denying services to general public

The customer profile shall be a confidential document and details contained therein shall not be divulged for cross selling or any other purpose.

B. CUSTOMER IDENTIFICATION PROCEDURE (CIP):

The Customer Identification means identifying the customer and verifying the customer his/her identity by using reliable, documents, data or information. Ahalia Money Exchange & Financial Services Private Limited needs to obtain information necessary to establish, the identity of new customers.

The detail of information required from customers is mentioned below:

Transaction with individuals

Legal name and any other names used

Correct Permanent address


Documents to be required for Identification

Passport (ii) PAN Card (iii)

Voters Identity Card (iv)

Driving License (v) Aadhar Card (vi) Identity Card issued by the employers or other authority (vii) Letter from a recognized public authority or public servant verifying the identity and residence of the customer

Telephone bill (ii) Bank account statement (iii) Letter from any recognized public authority (iv) Electricity Bill (v) Ration Card (vi) Letter from employer (vii) Passport (viii) Voters Identity Card (ix) Driving License


Establishment of business relationship - Corporates.

Name of the Company

Principal place of business

Mailing address of the Company

Telephone/Fax Number


Documents to be required for Identification.

Certificate of incorporation and Memorandum & Articles of Association (ii) Resolution of the Board of Directors to deposit the money in the Company along with list of authorized signatories (iii) Power of Attorney granted to its Managers, Officers of employees to transact business of its behalf (iv) Copy of PAN allotment letter (v) Copy of the Telephone Bill.

Establishment of business relationship - Documents to be required for

Partnership firms Identification

Legal Name

Address

Names of all Partners and their address

Telephone numbers of the firm and Partners


(i) Registration Certificate, if registered

(ii) Partnership deed (iii) Power of Attorney granted to a Partner or an employee of the firm to transact business on its behalf (iv) Any officially valid documents, identifying the Partners and the persons holding the Power of Attorney and their addresses

(v) Telephone bill in the name of firm/partner.


Establishment of business relationship - Documents to be required for

Trusts & Foundations Identification

Names of Trustees, Settlers, beneficiaries and signatories

Names and address of the Founder, the Managers/Directors and the Beneficiaries

Telephone/Fax Number

(i) Certificate of registration, if registered (ii) Power of Attorney granted to transact business on its behalf (iii) Any officially valid document to identify the Trustees, Settlers, beneficiaries and those holding Power of Attorney, Founders/ Managers/ Directors and their address (iv) Resolution of the managing body of the foundation/ association (v) Telephone bill.

C. MONITORING OF TRANSACTIONS:

Regular monitoring of policy and its implementation.

Effective controls shall be implemented.

Transactions in the accounts will also be monitored with a view to timely submitting to FIU-IND by the Principal Officer , the Cash Transaction Report (CTR) in respect of cash transactions of Rs. 50,000/- (Rupees Fifty thousand only) and above undertaken in an account either singly or in an integrally connected manner.

Transactions of suspicious nature and/or any other type of transaction notified under PMLA will be reported by the Principal Officer to Financial Intelligence Unit India in Suspicious Transaction Report (STR) format.

A record of CTR & STR transactions will be preserved and maintained for the period as prescribed in PMLA.

The company may ask sources of funds before accepting deposits from customers requiring higher due diligence as briefed hereunder:

i. Non-resident customers.

ii. Trusts, Charities, NGOs and Organizations receiving donations.

iii. Companies having close family shareholding or beneficial ownership.

iv. Politically exposed persons (PEPs) of foreign origin and

v. Those with dubious reputation as per public information available etc.

D. RISK CATEGORISATION

For the purpose of Risk Categorization, individuals (other than High Net Worth) and entities whose identities and source of income can be easily identified and transactions by whom by and large conform to the known profile may be categorized as low risk.

Custom that are likely to pose a higher than average risk should be categorized as medium of high risk depending on customers background, nature and location of activity, country of origin, source of funds and his client profile etc.

Company will apply enhanced due diligence measures based on the risk assessment, thereby requiring intensive due diligence for higher risk customers, especially those for whom the sources of funds are not clear. Examples of customers requiring enhanced due diligence include non-resident customers, customers from countries that do not or insufficiently apply the FTAF standards, high netwoth individuals (HNIs), trusts charities, NGOs and organizations receiving donations, politically exposed persons (PEPs), non-face to face customers and those with dubious reputation as per public information available etc.

It is important to bear in mind that the adoption of customer acceptance policy and its implementation should not become too restrictive and must not result in denial of services to general public.

Guidelines for Money Transfer Service Schemes.

A. Identification of the Customer

Before effecting a transaction, the staff should confirm the identity of the customer with the help of any valid photo identity card /document that helps in such identification.

The customer should produce the above documents in original and staff member has to ensure its genuineness.

Inspection of all documents should be carefully done. The photo, name, signature, expiry date, etc. given in all the documents and papers should be carefully checked.

Every time the staff should ask for the original identity of the customer and counter check the same with the information available in the customer database.

The customer, the concerned staff and the cashier are required to sign the application to execute any transaction. "No Signature No Transaction" shall be the thumb rule.

B. Registering the Customer

Valid identification of customers to avail Money Transfer payments is mandatory.

Customer database to be maintained by all branches and scanned copies of the identification documents kept on record. For regular customers, we propose to put in place a system for registering the customers with a Customer Reference Card having a Unique Number.

The History of the transactions done by any customer could also be accessed at any point of time for scrutiny under the proposed dispensation.

C. Transaction Form Filling

Individual customer shall fill in the required forms prescribed by the service providers.

Copy of a valid ID is compulsorily taken to avail the service.

Modifications or Additions in the Receive Now form shall be done at the respective branches by a specially designated person following prudent procedures.

The forms shall be signed by the customer in the presence of the designated officer only.


Maintain and preserve the records of necessary forms and Beneficiary photo id proof at the branch locations for a minimum period of 10 years from the date of transaction.

  1. High Value Transactions

Customer, whether registered or not, have to declare details such as purpose of remittance and give the details of the sender.

Maximum amount allowed under a single transfer is USD 2500/- as per extant guidelines of Reserve Bank of India.

The maximum number of transactions an individual can receive in a calendar year is now fixed at thirty.

The purpose of remittance has to be for domestic use/family maintenance. Remittances for other purposes like trade or commercial, charitable trust, donation etc. are not allowed.

The branches shall ensure to take a declaration from the beneficiaries confirming the above purpose and number of transaction.

The maximum amount a beneficiary can collect in cash in a day is Rs. 50,000/-. More than one transaction shall not be paid to a single beneficiary in cash in a day. Any payment above Rs. 50,000/- shall be affected by A/C payee cheque for the amount.

Points of doubts, if any should be immediately referred to the Principal Officer at Corporate Office before effecting payments.

The entire edifice is erected on transparency of our financial and regulatory reporting with swift disclosures of any breaches.

Guidelines for Money Changing

Reserve Bank of India has brought about detailed Anti-Money Laundering (AML) guidelines to enable AMCs to put in place proper policy framework and systems and procedures for prevention of money laundering while undertaking money changing transactions.

In the light of the increased concern regarding money laundering activities and to prevent the company being misused by such activities, Ahalia Money Exchange & Financial Services Private Limited has formulated suitable policies and procedures in this regard. The policy framework known as Anti-Money Laundering Guidelines and Know Your Customer Procedure has been put in place with due approval from the appropriate authority.

A. Money Laundering

Money laundering is a process by which money or other assets obtained as proceeds of crime are exchanged for clean money or other assets with no obvious link to their criminal origins.

The offence of money laundering has been defined in Section 3 of the Prevention of

Money Laundering Act, 2002 (PMLA) as whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering.

B. Anti Money Laundering Measures.

The purpose of prescribing Anti-money laundering guidelines is to prevent the system of Authorized Money Changers engaged in the purchase and sale of foreign currency notes/travelers cheques from being used for money laundering. Therefore, Anti-money laundering measures would include:

a) Identification of customers according to Know Your Customer norms

b) Recognition, handling and disclosure of suspicious transactions.

c) Appointment of Principal Officer

d) Staff Training

e) Maintenance of records

f) Audit Transactions.

C. Know Your Customer (KYC) Identification of customers

All transactions should be undertaken only after proper identification of the customer. Photocopies of proof of identification should invariably be retained by the AMC after verifying the document in original. Full details of name and address as well as the details of the identity document provided should also be kept on record. If a transaction is being undertaken on behalf of another person, identification evidence of all the persons concerned should be obtained and kept on record.

D. Purchase & Sale of Foreign Currency notes & Travellers Cheques

For purchase of foreign exchange less than Rs. 50,000 or its equivalent, photocopies of the identification document need not be kept on record. However,full details of the identification document and contact details should be maintained in the encashment certificate.

For encashment in excess of Rs. 50,000 or its equivalent, the photocopies of the identification document should be maintained for a minimum period of ten years.

Payment in cash in Indian Rupees to resident customers towards purchase of foreign currency notes and/or Traveller's Cheques from them may be acceded to the extent of only US $1000 its equivalent per transaction .

Payment in cash in Indian Rupees to foreign visitors/Non-Resident Indian may be acceded to the extent of only US $3000 or its equivalent. or

Currency Declaration Form has to be obtained where the amount of forex tendered for encashment by a non-resident person returning from abroad exceeds US $5000

All encashment within 30 days may be treated as single transaction for the purpose. In all other cases AMCs should make payment by way of Account Payee cheque/demand draft only.

Sale of foreign exchange should be made only on personal application and identification. For identification purpose, the passport of the customer should be insisted upon. Payment in excess of Rs. 50,000/- towards sale of foreign exchange should be received only by account payee cheque/demand draft.

E. Establishment of Business Relationship

Relationship with a business entity like a company/firm should be established only after obtaining and verifying suitable documents in support of name, address and business activity such as Certificate of Incorporation under the Companies Act, 1956, MOA and AOA, Registration Certificate of a firm (if registered), Partnership deed, etc.

A list of employees who would be authorized to transact on behalf of the company/firm and documents of their identification together with their signatures, should also be called for. Copies of all documents called for verification should be kept on record.

F. Recognition and reporting of suspicious transactions

Staff should be always vigilant against money laundering transactions at all times. A transaction may be of a suspicious nature irrespective of the amount involved. Some possible suspicious activity indicators are given below:

Customer is reluctant to provide details/documents on frivolous grounds.

The transaction is undertaken by one or more intermediaries to protect the identity of the beneficiary or hide their involvement.

Large cash transactions

Size and frequency of transactions is high considering the normal business of the customer

Change in the pattern of business transacted.

G. Appointment of Principal Officer

Our Company has appointed Manager-FFMC to be designated as the Principal Officer posted at Corporate Office of the Ahalia Money Exchange & Financial Services at the below mentioned address.

SSS Plaza, 1st Floor,

Palakkad Road,

Kizhakkumapattukara,

East Fort,

Thrissur 680 005.

Ph: 0487-2434900 - 08

H. Responsibility of Principal Officer

Monitoring and reporting of transaction and sharing of information as required by the Competent Authority.

Implementation of Know your Customer (KYC) Policy-Anti Money Laundering Standards

Training of staff and preparing detailed guidelines/handbook for detection of suspicious transactions

Preparing annual reports on the adequacy or otherwise of systems and procedures in place to prevent money laundering and submit it to the Top Management within 3 months of the end of the financial year

Submission of Cash Transaction Report(CTR) and Suspicious Transaction Report-(STR) to the FIU-IND.

I. Reporting of Suspicious Transactions

It is the duty of all staff/Officers to report suspicious and unusual transactions to the Principal Officer at Corporate Office. All suspicious transactions should be reported to the Principal Officer before they are undertaken. Full details of all suspicious transactions, whether put through or not, should be reported, in writing, to the Principal Officer. Any transaction which seems suspicious may be undertaken only with prior approval of Principal Officer. If the Principal Officer is reasonably satisfied that the suspicious transaction has or may have resulted in money laundering, Principal Officer should make a report to the FIU-IND at the following address:

The Director FIU-IND

Financial Intelligence Unit India

6th Floor, Hotel Samrat,

Chanakyapuri

New Delhi - 110 021

J. Training of Staff

All the Managers and Staff would be trained to be aware of the policies and procedures relating to prevention of money laundering, provisions of the PMLA and the need to monitor all transactions to ensure that no suspicious activity is being undertaken under the guise of money changing.

The Company will have an ongoing training programme for consistent implementation of the AML measures.

K. Maintenance of Records

The following documents should be preserved for a minimum period of ten years from the date of transactions.

Maintain and preserve the records of necessary forms and Beneficiary photo id proof at the branch locations for a minimum period of 10 years from the date of transaction.

Copy of the monthly Cash Transaction Report (CTR) submitted to the FIU-IND

Statements/Registers prescribed by the Reserve Bank from time to time.

All Inspection/Audit/Concurrent Audit Reports.

Annual Reports of the Principal Officer submitted to the Top Management on the adequacy or otherwise of systems and procedures in place to prevent money laundering.

Details of all suspicious transactions reported in writing or otherwise to the Principal Officer.

Details of all transactions involving purchase of foreign exchange against payment in cash exceeding Indian Rs. 10,00,000 from interrelated persons during one month.

All correspondence/reports with the appropriate authority in connection with suspicious transactions.

References from Law Enforcement Authorities, including FIU, should be preserved until the cases are adjudicated and closed.

  1. Transaction Audit

The Concurrent Auditor/Inspecting officials should check all transactions to verify that they have been done in compliance with the anti-money laundering guidelines and have been reported as required. Compliance on the lapses, if any, recorded by the concurrent auditor should be put up to the Board. A Certificate from the Statutory Auditor on the compliance with AML guidelines should be obtained at the time of preparation of the Annual Report and kept on record.

General Guidelines

  1. Registration

All money changing transactions shall be carried out with due diligence as prescribed by the RBI and other laws in force. In the case of other money changers, the branches shall ensure that their licence is valid, officials transacting business are authorized and all payments are made only through Crossed Account Payee cheques.

2. Monitoring and Control

All relevant reports of all Inward Remittance transactions and Money Exchange transactions have to be generated at day end at all the branches. Branch Manager shall scrutinize this report on daily basis, duly sign for having verified them and preserve this documentation for ten years from date.

Branch Head is appointed at every branch. The Branch Head shall be responsible for the execution and implementation of the Regulations issued by the Reserve Bank of India and our Anti Money Laundering policies & Procedures. They shall also be responsible

for reporting any suspicious transactions directly to the Reporting Officer. They shall take instructions from the Reporting Officer and shall report to him on all matters regarding compliance.

The Concurrent Auditor of the company shall in their monthly audit report mention on the efficacy of the implementation of the policy, procedures and the extent control exercised.

3. Compliance

The Branch Heads or the Branch In-charge shall be deemed as the Branch Compliance Officer and he/she shall ensure that in the day to day operations, all the compliance instructions shall be strictly adhered to. Any deviation shall be brought to the attention of Corporate Office. Wilful suppression of material information from the Corporate Office will be treated as major act of misconduct and appropriate action will fall to be considered.

Our Company has appointed Head Audit to be designated as the Chief Compliance Officer posted at Corporate Office. The branch compliance officers shall report to the Chief Compliance Officer on all matters relating to compliance. The responsibility of the CCO will be as follows:-

a) Develop Anti-money laundering and compliance procedures and programmes in accordance with the regulatory prescriptions.

b) Create and implement a plan for training the staff across the network.

c) Develop and maintain formal written procedures for reviewing transactions of suspicious activity.

d) Carry out regular, timely and thorough transaction reviews.

e) Review suspicious activity reports received from branches and carries out further analysis wherever necessary.

f) Review ad carry out investigations relating to reports received at Corporate Office from branches.

g) Establish and maintain close working relationship with appropriate regulatory bodies.

h) Identify trends and opportunities to further improve the companys anti- money laundering measures and its compliance.

i) Perform on-going compliance exercises including audit and mystery shopping.

  1. Punishment for Money Laundering

RI for 3 to 7 years

RI for 10 years if crime is offence under Narcotic drugs etc

Fine up to Rs. 5 lacs


5. Verification of character and antecedents of new recruits

The HR Department will check the character and antecedents of all new staff by checking their references. This will be done before issuing the offer of employment.

6. Customer Education

The Company recognizes the need to spread awareness on KYC, Anti Money Laundering measures and the rationale behind them amongst the customers and shall take suitable steps for the purpose

7. Introduction of New technologies Travel Currency Cards

The Company will pay special attention to the money laundering threats arising from new or developing technologies and take necessary steps to prevent its misuse for money laundering activities and also will ensure that appropriate KYC

procedures are duly applied to the customers using new technology driven products.

8. Combating Financing of Terrorism

In terms of PML Rules, suspicious transaction should include inter alia transactions which give to a reasonable ground of suspicion that it may involve the proceeds of an offence mentioned in the schedule of the PMLA regardless of the value involved. Company have developed suitable mechanism through appropriate policy framework for enhanced monitoring of transactions suspected of having terrorist links and making suitable reports to the Finance Intelligence unit India (FIU-IND) on priority.

9. Risk Management

The Board of Directors of the company shall ensure that an effective KYC programme is put in place by establishing appropriate procedures and ensuring effective implementation. It should cover proper management oversight system and controls, segregation of duties, training and other related matters. Responsibility should be explicitly allocated within the Company for ensuring that the policies and procedures of the Company are implemented effectively.

The company will endeavour to pay special attention to any money laundering threats that may arise from new or developing technologies that might favour anonymity and take measures to prevent their use of money laundering purposes and financing of terrorism activities.

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RBI Warning

The Reserve Bank of India has cautioned the members of public not to fall prey to fictitious offers / lottery winnings / remittance of cheap funds in foreign currency from abroad by so-called foreign entities/ individuals or to Indian residents acting as representatives of such entities/individuals. Fraudsters send attractive offers to gullible public through letters, e-mails, mobile phones, SMS etc. If you receive any letter, email or SMS of such nature, please do not reply to the senders and please do not fall prey to fraudsters.