Modify FPC norms in a month, RBI  tells NBFCs

The Reserve Bank has asked all non-banking finance companies (NBFCs) to revise their fair practices code (FPC) norms with prior approval of their boards within a month.

“The NBFCs may ... make suitable amendments in their existing FPC norms and the modified FPC should be put in place by all NBFCs with the approval of their boards within one month,” RBI said in its circular.

In 2006, the RBI had issued FPC norms for all NBFCs to be adopted by them while doing the lending business. It also covered norms on adequate disclosures on terms and conditions of a loan, and also adopting a non-coercive recovery method.

“As complaints received against NBFCs generally pertain to charging of high interest or penal interest, NBFCs shall mention the penal interest charged for late repayment in bold in the loan agreement,” it said.

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