Fair Practices Code
Introduction
This Fair Practices Code (hereinafter referred to as "FPC" or "Code") is aimed at providing all stakeholders, especially customers, an effective overview of practices followed by Yellow Metal Loans Private Limited ("Yellow Metal Loans" or "the Company") in respect of the financial facilities and services offered by it.
This Code is framed in accordance with the Master Direction – Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025, as amended from time to time ("Master Direction").
Yellow Metal Loans is primarily engaged in providing loans against eligible gold collateral. The Company may, from time to time, also offer other lending products as permitted by applicable RBI regulations and as approved by the Board of Directors.
This Code is structured in two parts:
Part I contains common fair practice standards applicable to all lending products and business lines of the Company.
Part II contains specific provisions applicable exclusively to the Company's gold loan business, reflecting the distinct nature of gold-secured lending and the specific regulatory requirements governing it.
This Fair Practices Code shall be prominently displayed on the website of the Company and shall be made available to borrowers at the branch upon request. The objectives of this Code are:
To promote good and fair practices in dealing with customers across all lending products.
To increase transparency so that customers have a better understanding of what they can reasonably expect from the Company's services.
To ensure compliance with legal and regulatory norms in matters relating to loan processing, disbursement, and recovery of advances.
To provide specific protections to gold loan borrowers in relation to gold appraisal, custody, auction, and return of collateral.
To strengthen mechanisms for redressal of customer grievances across all business lines.
Part I – Common fair practices (applicable to all business lines)
The provisions in Part I apply to all lending products offered by the Company, including gold loans, and any other loan products that the Company may offer from time to time.
A. Applications for loans and their processing
1. All communication to the borrower shall be in English or in the vernacular language understood by the borrower. At branches in bilingual or multilingual areas, the Company shall endeavour to communicate in the language most comfortable to the borrower.
2. The loan application form issued by the Company shall include all necessary information that affects the interest of the borrower, so that a meaningful comparison with terms offered by other lenders can be made and an informed decision taken.
3. The Company shall devise a system of giving written acknowledgement for receipt of all loan applications. The acknowledgement shall indicate the time frame within which the loan application will be disposed of.
4. Applications complete in all respects shall be processed within a reasonable time frame from the date of receipt of the duly completed application together with the requisite documents. In case a proposal is not approved, the borrower shall be informed accordingly.
5. The loan application shall indicate all information and documents required as part of the application process. The Company shall conduct KYC as per its KYC Policy. If any additional documents are required during processing, the Company shall promptly inform the borrower.
B. Loan appraisal and terms & conditions
1. The Company shall, upon sanction of any loan, convey to the borrower, in the vernacular language or a language understood by the borrower, a sanction letter or Key Fact Statement (KFS) indicating:
The amount of loan sanctioned.
The annualized rate of interest and the Annual Percentage Rate (APR).
Overdue or penal charges and the method of their application.
Loan tenure and repayment schedule.
All fees, charges, and processing costs applicable.
The nature of collateral or security required, if any.
Consequences of non-repayment.
2. The Company shall mention any penal charges for late repayment and any interest, charge, or fee other than those specified in the sanction letter, in bold, in the loan agreement.
3. The Company shall obtain the borrower's acceptance of the loan terms and conditions as stipulated in the loan agreement and maintain a record of such acceptance. A copy of the loan agreement, along with all enclosures referred to therein, shall be furnished to the borrower at the time of sanction or disbursement.
C. Disbursement of loans including changes in terms and conditions
1. The Company shall give notice to all borrowers (in the vernacular language or a language understood by the borrower) of any change in the terms and conditions, including interest rates, service charges, or prepayment charges. Changes in interest rates and charges shall be effected only prospectively. A suitable condition in this regard shall be incorporated in the loan agreement.
2. Any decision to recall or accelerate payment or performance under the loan agreement shall be in consonance with the terms of the loan agreement and shall be preceded by due notice to the borrower.
3. All securities pertaining to the loan shall be released upon receipt of full and final payment of all outstanding dues, subject to any legitimate right or lien the Company may have. If such right of set-off is to be exercised, the borrower shall be given prior written notice specifying the remaining claim and the conditions under which the Company is entitled to retain the security.
4. The disbursement of loan proceeds shall be made directly to the borrower's bank account or through other permitted payment channels.
D. Interest charged
1. To ensure that customers are not charged excessive interest rates and charges, the Board of the Company has adopted an Interest Rate Policy for determining interest rates, processing fees, and other charges. The same has been published on the Company's website.
2. The rate of interest shall be annualized so that the borrower is clearly aware of the exact rates that will be charged to the account.
3. The rate of interest, the approach for gradation of risk, and the rationale for charging different rates to different categories of borrowers shall be as per the Interest Rate Policy.
4. The Company shall not charge foreclosure charges or pre-payment penalties on all floating rate term loans sanctioned for purposes other than business to individual borrowers, with or without co-obligants.
5. Where any loan account becomes overdue, penal or overdue interest shall be applied strictly in accordance with the terms of the loan agreement and the Interest Rate Policy. Penal charges shall not be applied in a manner that is disproportionate or undisclosed.
E. General obligations
1. The Company shall not interfere in the affairs of the borrower except for the purposes provided in the loan agreement, unless new information not earlier disclosed by the borrower has come to the notice of the Company.
2. In the matter of recovery of loans, the Company shall not resort to undue harassment, including persistently contacting borrowers at odd hours or use of muscle power for recovery. The Company shall ensure that staff are adequately trained to deal with customers in an appropriate manner.
3. In case of receipt of a request from the borrower for transfer of the borrowal account to another lender, the consent or objection of the Company, if any, shall be conveyed within 21 days from the date of receipt of such request. Such transfer shall be as per transparent contractual terms in consonance with applicable law.
4. The Company shall not discriminate in extending products and services to physically or visually challenged applicants on grounds of disability. The Company shall ensure effective redressal of grievances of persons with disabilities under its Grievance Redressal Mechanism.
5. The Company shall maintain the confidentiality of all customer information and shall not use any information obtained from the borrower for any purpose other than the processing and administration of the borrower's loan account, without the prior consent of the borrower.
6. The Company shall not engage in mis-selling of any insurance or ancillary product to borrowers. Any product offered alongside a loan shall be optional and disclosed clearly as a separate product with its own terms and cost.
7. The Company shall not levy any charge that has not been disclosed to the borrower in the sanction letter, KFS, or loan agreement.
F. Collection of dues
The Company shall put in place a mechanism for identification of borrowers facing repayment-related difficulties, engagement with such borrowers, and providing them necessary guidance about the recourse available, including restructuring options where applicable.
The Company shall adhere to standards in all recovery and collection activities across all business lines as per the code of conduct for collection/recovery agents adopted by the Company.
G. Grievance redressal mechanism
The Board of Directors of Yellow Metal Loans has laid down an appropriate Grievance Redressal Mechanism (GRM) within the Company to resolve disputes arising from the Company's lending operations. The mechanism ensures that all disputes are heard and disposed of at least at the next higher level of the Company's hierarchy.
The Senior Management shall periodically review the functioning of the Grievance Redressal Mechanism. A consolidated report of such reviews shall be submitted to the Board annually.
The following grievance categories are covered under the Grievance Redressal Mechanism for all business lines:
Disputes regarding loan sanction, disbursement, or terms and conditions.
Complaints regarding interest rates or charges applied to the loan account.
Complaints against recovery agents for coercive, harassing, or improper conduct.
Grievances related to pre-payment or foreclosure.
Any other complaint arising from the Company's lending operations.
The contact details of the Company's Nodal Officer for grievance redressal are:
Nodal Officer: Rahul Boggaram Nagarjuna Gupta
Designation: Nodal/Grievance Officer, Director
Email: contact@yellowmetal.co
Phone: 9090976076
Office address: Ground Floor, Building No. 1, Nisarga, 1st Main, 3rd Cross, Opp. Deccan Hospital, Ashwini Extension, Chintamani, Chikkaballapur, Karnataka – 563125
The detailed Grievance Redressal Mechanism is available on the Company's website and at each branch on request. If a borrower is not satisfied with the Company's resolution, the borrower may approach the RBI as defined in the GRM of the Company.
H. Review
A periodic review (at least annually) of compliance with this Fair Practices Code and the functioning of the Grievance Redressal Mechanism shall be carried out by the Company. The report of such review shall be submitted to the Board of Directors for approval and update.
In the event of any change in the Master Direction – RBI (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025, or any other applicable RBI regulation, this Code shall be reviewed and updated within 30 days of such change and placed before the Board for approval.
Any amendments to this Code shall be communicated to all borrowers through the Company's website and branch notice boards.
Part II – Specific provisions for gold loan business
The provisions in Part II apply exclusively to the Company's gold loan business, i.e., loans extended against the pledge of gold ornaments and jewellery as collateral. These provisions supplement (and do not replace) the common provisions in Part I.
Given that lending against gold collateral is the primary business of the Company, the following specific standards apply to all gold loan transactions over and above the common provisions in Part I of this Code.
I. KYC and ownership verification
1. The Company shall comply with all KYC guidelines stipulated by the RBI as part of the gold loan origination process. KYC shall be completed before disbursement of any gold loan.
2. No gold loan shall be disbursed to a borrower whose identity and address have not been verified in accordance with the Company's KYC Policy.
3. The Company shall obtain a declaration from the borrower confirming that:
The gold ornaments and jewellery pledged are owned by the borrower.
The gold is not subject to any prior charge, lien, hypothecation, or encumbrance.
The borrower has the authority to pledge the gold as collateral.
4. In case of any doubt regarding the ownership or origin of the gold, the Company shall conduct enhanced due diligence before proceeding with the loan.
J. Gold appraisal and valuation
1. The Company shall put in place a proper and transparent assaying procedure for gold ornaments and jewellery accepted as collateral. All appraisals shall be conducted by trained and certified staff of the Company at the branch, using standardized testing equipment.
2. The appraisal process shall include assessment of the weight and purity of the gold using approved testing methods including touchstone testing, acid testing, or such other standardized methods as may be adopted by the Company from time to time.
3. The borrower shall be present during the appraisal and shall be informed of:
The assessed weight and purity (in carats) of the gold.
The basis of the market value applied for computing the eligible loan amount.
The eligible loan amount resulting from the appraisal.
4. The borrower shall be given a reasonable opportunity to accept or decline the loan offer after receiving the appraisal results, and before the gold is taken into the Company's custody.
5. The Company shall not sanction a gold loan based solely on self-declaration of purity by the borrower or based on photographs or third-party reports. Physical verification at the branch is mandatory.
6. No gold loan shall be sanctioned without the borrower being personally present at the branch at the time of appraisal and pledge, except as may be specifically permitted under applicable RBI guidelines.
K. Loan-to-value (LTV) norms
1. The Company shall ensure that the LTV ratio at the time of loan disbursement does not exceed the limit prescribed by the RBI from time to time.
2. The LTV ratio and the eligible loan amount shall be disclosed to the borrower in the sanction letter and KFS before the loan is disbursed.
3. The Company shall monitor the LTV ratio of its gold loan portfolio on an ongoing basis. In the event of a decline in gold prices causing an LTV breach at the portfolio level, the Company shall take appropriate action in accordance with applicable RBI guidelines, including notifying affected borrowers and seeking additional collateral or partial repayment.
4. The Company shall not circumvent the LTV norms through any direct or indirect means, including by splitting a single loan into multiple loans or by accepting non-gold collateral to justify a higher loan amount.
L. Storage and insurance of gold collateral
1. All branches of the Company shall have proper storage facilities, including strong rooms or safes conforming to the standards of approved make, for the safe custody of pledged gold ornaments.
2. The Company shall maintain a pledge register or equivalent electronic record of each branch, recording for each borrower: the particulars of the gold pledged (description, weight, purity), the loan account number, and the date of pledge.
3. Pledged gold ornaments shall be stored separately, tagged, and linked to the individual borrower's loan account to prevent co-mingling.
4. Gold collateral held at branches shall be adequately insured against theft, burglary, fire, and other standard risks at all times. Gold in transit (between branches or to and from auction venues) shall also be covered by adequate insurance.
5. The Company shall conduct periodic reviews of gold held at each branch to ensure quality, quantity, and proper storage.
6. The Company shall conduct periodic surprise audits of gold held at each branch through internal audit, to verify weight, purity, count, and condition against loan records. Discrepancies shall be immediately escalated to Senior Management.
M. Loan documentation and disbursement – gold loans
1. In addition to the general documentation requirements in Part I, the sanction letter and KFS for gold loans shall specifically disclose:
The description, weight, and purity of the gold collateral accepted.
The LTV ratio applied and the resulting eligible loan amount.
All charges related to gold storage, insurance, valuation, or auction.
The notice period and procedure that shall apply before any auction of pledged gold in case of non-repayment.
2. The loan agreement for gold loans shall also include details of the auction procedure in the event of non-repayment, as required by applicable RBI guidelines.
3. A pledge receipt shall be issued to the borrower at the time of pledging the gold, confirming the details of the gold taken into custody.
4. The disbursement of gold loan proceeds shall be made directly to the borrower's bank account or through other permitted payment channels. No disbursement shall be made in a manner that bypasses the borrower.
N. Monitoring of gold loan portfolio
1. The Company shall monitor its gold loan portfolio on an ongoing basis, including monitoring of: overdue accounts, LTV ratios relative to prevailing gold prices, and concentration of exposure by ticket size and geography.
2. The Company shall put in place trigger-based alerts for overdue accounts to initiate the pre-auction notice process in accordance with the Company's Auction Policy.
3. The Company shall engage with borrowers facing repayment difficulties before initiating auction proceedings, in accordance with the recovery standards in Part I of this Code and the Company's Recovery Policy.
O. Auction in case of non-repayment
The auction process is governed in detail by the Company's Board-approved Auction Policy. The provisions below summarise the key fair practice commitments applicable to auction of gold collateral and should be read together with the Auction Policy.
1. The auction procedure in case of non-repayment shall be transparent. Prior written notice shall be given to the borrower before any auction is conducted, providing the borrower a final opportunity to repay all outstanding dues and redeem the pledged gold.
2. Before initiating auction proceedings, the Company shall:
Send a written Auction Notice to the borrower at their registered address and contact details, providing a minimum notice period as specified in the loan agreement and the Auction Policy.
Clearly state in the notice: the total outstanding dues, the proposed auction date, and the borrower's right to redeem the gold by repaying all dues before the auction.
Make reasonable attempts to contact the borrower through available communication channels before proceeding with the auction.
3. There shall be no conflict of interest in the auction process. The auction shall ensure arm's length relationship in all transactions, including with group companies and related entities. The Company shall not participate in the auctions held for its own gold loan collateral.
4. Auctioneers shall be appointed with the prior approval of the Board of Directors. The auction shall be announced to the public through advertisements in at least two newspapers, one in the vernacular language and one in a national daily newspaper.
5. The auction shall be conducted at a fair and transparent price. A Reserve Price shall be set based on the prevailing market value of gold before every auction.
6. Any amount received in excess of the total outstanding dues of the Company from auction proceeds shall be promptly refunded to the borrower, along with a Settlement Statement showing the full application of proceeds.
7. If the auction proceeds are insufficient to cover the outstanding dues, the Company shall communicate the remaining liability to the borrower in writing and shall follow due process for recovery, in accordance with the Company's Recovery Policy and this Code.
8. The Company shall maintain systems and procedures for separation of duties in gold mobilization, execution, and approval of auction, including controls to detect and prevent fraud.
P. Return of gold collateral on repayment
1. Upon full repayment of all outstanding dues under a gold loan, the Company shall return the pledged gold ornaments to the borrower promptly, in the same condition as received, against a proper receipt signed by the borrower.
2. The Company shall not withhold the return of pledged gold beyond a reasonable time after full repayment, except where a legitimate dispute or legal proceeding is pending.
3. The Company shall issue a No Dues Certificate to the borrower upon full repayment and return of gold collateral.
4. The borrower shall be entitled to inspect the gold at the time of return and may raise any objection regarding the condition of the returned gold at that time. The Company shall address such objections in accordance with its Grievance Redressal Mechanism.