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Jalan Chemical Industries

Fraud Risk Management Policy

Fraud Risk Management & Prevention Policy

INTRODUCTION

The Reserve Bank of India (RBI) has issued guidelines on Fair Practices Code for Non- Banking Financial Companies (NBFCs) as amended from time to time thereby setting standards for fair business and corporate practices while dealing with their customers. Jalan Chemical Industries Private Limited (“the Company” or “JCIPL”) hereby furnishes the Fair Practices Code (“the FPC”) based on the guidelines issued

by RBI. This sets minimum Fair Practice standards for the Company to follow when dealing with customers. The Company shall also make appropriate modifications in the FPC to conform to the standards that may be prescribed by RBI from time to time.

APPLICABILITY OF FAIR PRACTICE CODE

This Fair Practices Code applies to the following categories of products and services offered by us (currently offered or which may be introduced at a future date)

Loan and other products in the nature of financial assets.


Third Party products offered through a Company`s Agent, Partner or Outsourced Service Provider.


The FPC is applicable to the above irrespective of whether the same is provided physically, over the phone,


on the internet or by any other method whatsoever, existing or futuristic.

APPLICABILITY OF FAIR PRACTICE CODE

To promote good, fair and trust-worthy practices by setting minimum standards in dealing with customers.

To enable greater transparency for customers in having a better understanding of the product, taking informed decisions and reasonably expect of the services.

To ensure compliance with legal norms in matters relating to recovery of advances.

To ensure building customer confidence in the Company.

To promote a fair and cordial relationship between customer and the Company.

To strengthen mechanisms for redressal of customer grievances

APPLICATION FOR LOANS & THEIR PROCESSING

The customers will be made aware of the required documents at the time of application of loan. However, the Company may, depending on the credit underwriting requirements require other documents from the customers, as it may deem fit.
All Loan Agreement shall contain detailed information relating to the terms and conditions governing the Loan and other relevant information affecting the interest of our valuable customers.
The contents of loan documents will be in English as the language is understood by all our borrowers which further ensures that the customer understands the terms and conditions governing the Loan.
Sanction letter shall include necessary information which affects the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by other NBFCs can be made and informed decision can be taken by the borrower.
Wherever applicable, the Company shall follow the system of issuing acknowledgements for receipt of all loan applications. The Company will consider all the documents submitted and the information provided, verify the credit worthiness of the customer and evaluate the proposal at its sole discretion. As a matter of policy and customer service, loan applications are sanctioned / rejected immediately.
The completed loan agreement shall indicate the loan amount to be disbursed, information which affects the interest of the borrower, the amount of interest applicable, processing fee (if any), dates of interest payments due, loan tenure etc.

LOAN APPRAISAL AND TERMS AND CONDITIONS

JCIPL shall convey in writing to the borrower in English language as understood by the borrower by means of sanction letter or otherwise, the amount of loan sanctioned along with the terms and conditions including amount of interest, overdue interest, tenure of loan, commencement date, etc and method of

application thereof and shall keep the acceptance of these terms and conditions by the borrower on its record.

The Company shall furnish a copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.
Company shall mention the penal interest charged for late repayment in bold in the loan agreement.

APPLICABILITY OF FAIR PRACTICE CODE

Non-Interference

Company or any of the employee of the Company shall not interfere in the affairs of the borrower except as provided under the circumstances mentioned in the agreement.

If any new information or findings not previously disclosed by the borrower comes to the notice of JCIPL, the above restriction shall not apply.

Recovery Process

If any recovery proceedings need to be initiated, these shall be conducted in accordance with the rights provided under the Agreement and in accordance with legally accepted norms. JCIPL staff or any person authorized to represent the Company in collection of dues shall identify himself / herself . The Company or authorised representative shall provide the customers with all the information regarding overdue. The staff shall be adequately trained to deal with the customers in an appropriate manner.

Foreclosure charges/ Pre-payment penalties on floating rate term loans

As a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers of the Company, Company shall not charge foreclosure charges/ prepayment penalties on all floating rate term loans sanctioned to individual borrowers, if any

CONFIDENTIALITY

Unless authorized by the borrower, the Company will treat all his personal information as private and confidential. The Company may not reveal transaction details of the borrowers to any other persons except under following circumstances:
  • If the Company is required to provide the information to any statutory or regulatory body or bodies.
  • If arising out of a duty to the public to reveal the information.
  • If it is in the interest of the borrowers to provide such information (e.g. fraud prevention);
  • If the borrower has authorised the Company to provide such information to its group / associate / entities or companies or any such person/ entity as specifically agreed upon.

KNOW YOUR CUSTOMER GUIDELINES

JCIPL shall explain the requirements of KYC guidelines to its customers and inform them about the documents required for establishing the identity of the customer before loan sanctioning, account opening and operation.
JCIPL would obtain only such information to meet with company’s KYC, Anti-Money Laundering or any other statutory requirements. In case any additional information is asked for, it will be sought separately and shall specify the objective of obtaining such additional information.

FORCE MAJEURE

The various commitments outlined and made by the Company shall be applicable under the normal operating environment. In the event of any Force Majeure circumstances, the Company may not be able to fulfil the objectives under the FPC to the entire satisfaction of the borrowers, the stakeholders and the public in general.

BOARD OF DIRECTOR MEETINGS AND REVIEW

The various commitments outlined and made by the Company shall be applicable under the normal operating environment. In the event of any Force Majeure circumstances, the Company may not be able to fulfil the objectives under the FPC to the entire satisfaction of the borrowers, the stakeholders and the public in general.

Background

In compliance with the guidelines issued by RBI on Master Direction - Fraud Risk Management in NBFCs Directions 2024, doc vide RBI/DOS/2024-25/120 DO5.CO.FMG.SEC.No.7/23.04.001/2024-25, the Fraud Risk & Prevention Policy has been crafted with the aim of setting up a framework for preventing detecting, investigating and reporting fraud incidents within Jalan Chemist Industries Private Limited (referred to as "JCIPL’ or ’the Company’).

Scope of the Pelicy

This pplicy is applicable to any instances of fraud, whether confirmed or suspected, involving employees, external agencies and individuals with a business relationship with jalan Chemical Industries Private Limited. JCIPL shall ensure that the principles of natural justice are strictly adhered to before classifying / dedaring an account as fraud.

ObJectlves of the Policy

This policy aims to insfill a proactive approach within the company for identifying, analyzing and managing the risk of fraud. The company,wiI1 maintain a zern-tolerance smnce toward fraud across all levels and will implement measures to prevent fraud.

The Policy is designed to achieve the following obje‹:tives:

  • Establishing procedures and controls that facilitate fraud detection and prevention.
  • Providing guidance to JCIPL employees on fraud prevention, identification and detection.
  • Developing internal controls.
  • Promptly documenting and reporting fraud incidents.
  • Offering essential training toJCIPL staff to enhance their awareness and capabilities in fraud prevention.

Fraud Rish Management Structure

The effectiveness of a risk management system depends on putting in place appropriate and effective risk management architecture. In pursuance of RBI guidelines, necessary role centres have been created in the organization structure to facilitate discharge of risk management function.

Board of Directors: The Board of Directors will provide strategic guidance for implementing a Fraud Risk Management Framework

Risk Management Committee (RPiC)

Actions Constituting Fraud

Fraud is defined as a deliberate act carried out by an individual through deception, suppression, cheating or any other illegal means, leading to wrongful gain for oneself or others and causing wrongful loss to others.

Examples of fraudulent activities include:

  • Misappropriation of funds or assets.
  • Improper handling or reporting of financial transactions.
  • Soliciting or accepting material benefits from customers or service providers.
  • Criminal breach of trust and misappropriatinn.
  • Fraudulent cashing of forged instruments, manipulation of financial records or using fictitious accounts.
  • First-Party Fraud: Willful default by borrowers without the intention to repay.
  • Unauthorized extension of credit for illicit gains.
  • negligence of duty leading to fraud
  • Cheating and documents forgery.
  • Fraudulent transactions involving foreign exchange;
  • Fraudulent electronic banking/digital payment related transactions committed on NBFCS; and
  • Any other fraudulent activities not covered by the above categories.

Cases involving "negligence and cash shortages " or ’irregularities™ are treated as fraud if there is suspicion or proof of fraudulent intent.

Fraud Detection & Control

Fraud detection involves identifying actual or potential instances of fraud. This can be accomplished through onsite inspections of processes, employees and documents.

The frauds can be prevented by taking control measures as below:

  • Performing thorough background checks and verifying documents of customers and other business associated of JCIPL
  • Periodic training programs for all employees on real life scenarios, recent fraud cases and Fraud Detection & Prevention
  • Implementing prevenfive internal controls thmugh appropriate process changes

firaud Monitoring

]CIPt. shall set-up an appropriate organizational structure for institutionalization of fraud risk management within their overall risk management funcñons.

The Senior Management on peñodic basis, shall share Fraud reports. if any and dashboards with internal management and stakeholders. All potential fraud/suspected reports will be reported to the RMC.

Staf Accountability

In all fraud cases, staff accountability wlll be mandatorily explored.

  • Confirm whether there was any lapse/mala-fide intent on part of employee which led to fraud.
  • If so then to take action against the staf concerned.

JCJP£ shall put in place a transparent mechanism to ensure that Whistle Blower complaints on possible fi-aud cases/suspicious activities In amounts(s) are examined and concluded appropriately under Whistle Blower Policy.

Fraud Reporting

JCIPL shall issue an extensive Show Cause tiotire (SCN) to the individuals, organizations and promoters as well as the executive directors and full-time employees against whom the fraud allegations are under investigation.

The Show Cause Notice shall capture the details about the transactions, acts and occurrences which constitute the basis for the declaration and reporting of fraud.

A minimum of 21 days shail be provided to the show caused Persons/Entities to respond.

Fraud Governance

Prior approval from the respective Regional Offices of RBI/SSM concerned is required for closure of fraud.

JClPL shall close the fraud cases after completing the following actions:

  • Cases pending with CBI/Police/Court have been finally disposed of.
  • The examination of staff accountability has been completed.
  • The amount of fraud has been recovered or written off.
  • Insurance claim wherever applicable has been settled.
  • The systems and procedures have been reviewed.

Policy Governance and Iteview

This policy will be reviewed ann ually or whenever there is an amendment to RBI guidelines.

The policy shall be approved by the Board on the recommendation of the Risk Management Committee of the Board.