Products and Customer Protection
What this domain tests
Product-level rules - gold loans, microfinance, digital lending - and the conduct standards that decide a customer complaint or an inspection finding.
Product rules
- Gold loans: loan-to-value capped at 75% of the value of gold jewellery, with documented valuation and auction processes.
- Microfinance: a collateral-free loan to a household with annual income up to Rs 3 lakh; total EMIs across all lenders must not exceed 50% of the household's monthly income; no prepayment penalty; interest rates are board-approved and disclosed rather than capped.
- Digital lending: disbursal straight to the borrower's bank account (no third-party pool account), disclosure of the all-inclusive cost, explicit data consent, no automatic credit limit increase without consent, and a cooling-off/look-up period to exit.
Conduct standards
- Fair Practices Code: application, sanction letter capturing all terms, reasons for rejection on request, annualised rate disclosure, no hidden charges, time-bound grievance redressal with a nodal officer.
- Key Facts Statement (KFS): mandatory for retail and MSME loans, showing the all-inclusive annual percentage rate, fees, penal charges, amortisation schedule and the cooling-off period for individuals.
- Penal charges (effective 1 January 2024): a fixed charge, never compounded or capitalised, disclosed in the KFS and never used to boost revenue.
- Recovery agents: no contact before 8 a.m. or after 7 p.m., no contact at the workplace if the borrower objects, no disclosure of the debt to third parties.
- Escalation: complaint to the NBFC first, then the RBI Integrated Ombudsman Scheme, 2021.
Worked example
Loan of Rs 1,00,000 for 12 months; interest Rs 14,000; processing fee Rs 2,000 deducted at disbursal, so the borrower receives Rs 98,000 and repays Rs 1,14,000. The flat rate looks like 14%, but on a net Rs 98,000 over 12 months the all-inclusive APR is roughly 30%. The KFS must show the APR, not the flat rate.
Traps
Quoting a flat rate in the KFS; capitalising penal interest; treating the KFS as voluntary; letting a recovery agent disclose the debt to a neighbour or employer.