Key Provisions: 1. Loan Terms Must Be Clearly Communicated o Interest rate, tenure, processing charges, foreclosure clauses must be disclosed before sanction. 2. Sanction Letter Mandatory o A copy of the loan sanction letter with terms must be shared with the borrower in the local language. 3. Refrain from Coercive Recovery Practices o Staff and collection agents must behave professionally. Use of threats or physical force is prohibited. 4. Grievance Redressal Mechanism o NBFCs must display a clear grievance redressal system with a timeline for resolution. ________________________________________ ? Why This Matters to You ? For NBFC Credit Managers: � You must ensure every loan file contains a signed copy of the sanction letter. � Recovery training for field officers should align with these rules. � Misbehavior with borrowers can lead to RBI penalties or license impact. ? For Compliance & Risk Teams: � Display fair practices in branches and websites. � Audit teams should validate sanction and disbursement process documentation. ? For BFSI Aspirants: � This is a favorite interview topic. Know this if you are appearing for roles in NBFCs or banks dealing in LAP, Business Loans, etc. ________________________________________ ? Example in Action Case: Ramesh, a Kirana store owner, took a ?2 lakh business loan. Violation: He was unaware of a 4% foreclosure charge until repayment. Correct Practice: NBFC must provide a written sanction letter, in local language, mentioning foreclosure charge clearly. It should be signed by the borrower.