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Fair Practice Code of one industry is different from that of another. It states that the sector is working according to the guidelines of the prescribed regulatory authority. While, in case of NBFC, the Reserve Bank of India regulates guidelines for Fair Practice Code of NBFC[1]. Furthermore, it also says that they are not doing any activity that the RBI has prohibited from doing. In this blog, we are going to learn about those guidelines in terms of the Non-Banking Financial sector.
Fair Practice Code of any industry justifies the functioning of that industry in compliance with the guidelines of the Reserve Bank of India {RBI} and they are not carrying out any such work which is prohibited/ barred/ forbidden by the RBI.
Suggested Read: New Trend in NBFC Business Model, Challenges and a Scalable Business model
The main purpose of using the Fair Practices Code is to;
Fair Practice Code guidelines for NBFCs as directed by the RBI are as follows;
Fair Practices Codes are regulatory practices used in companies to keep an eye on their functioning. It is suggested by the Reserve Bank of India and the companies, for which these rules are made, must comply with these guidelines. The implication of these rules is to make sure that the functions of the companies are in the interest of the people. Also, to make sure no such activity is performed by the companies which are not in compliance with the guidelines set by the RBI. There are certain guidelines set by the RBI specifically for the NBFC sector which they must obey. Furthermore, the NBFCs should refrain from using harassing behaviors to recover loans, such as calling at odd hours, use muscle power or any other similar activity.
Suggested Read: Amendment in RBI Act: What is there for NBFCs?
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