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Our main objective is to work towards bringing discipline among
our members by enforcing a model code of conduct, besides
presenting a unified face of this sector
 
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Draft Code of Conduct

The Draft Code of Conduct given below is available for members' critical comments / suggestions till December 31, 2004. FIDC Management Committee will deliberate on the Suggestions received before adoption. Once it is adopted, it would be binding on the members.

Click Here to Suggest on Draft Code of Conduct
  1. Preamble

  2. Objective

  3. Business Practices

  4. Accounting Policies and Practices

  5. Relationship with Regulators

  6. Relationship with the depositors / Investors / Customers

  7. Relationship amongst members

  8. Legal Matters

  9. Relationship with FIDC
  10. Disciplinary Proceedings





  1. Preamble

  2. Having regard to the restructuring of Non-Banking Financial Sector, on the basis of functional and regulatory experiences for the last quarter century and the necessity as well as the expediency of a self-regulatory mechanism, the Finance Industry Development Council (FIDC) is established with the objective of sustained, vibrant and healthy growth of the Non-Banking financial Sector. Hence, it is voluntarily agreed by and among all the members of the FIDC to meticulously follow this code of conduct.

  3. Objective


    1. To ensure disciplined and healthy growth of NBFCs.


    2. To ensure that each member company functions effectively as part of the financial system.


    3. To provide proper protection to the depositors/investors.


    4. To redress individual grievances of members.


    5. To have effective liaison with the regulators and the government.


    6. To assist the regulators in the policy formation and monitoring of the Sector.


    7. To achieve effective co-ordination amongst the members in matters of common interest.


    8. To improve the image and enhance the credibility of the Sector in order to infuse confidence in the minds of depositors, investors, borrowers and the regulators.


  4. Business Practices


  5. Members shall

    1. Conduct their business meticulously, complying with all relevant laws, rules and regulations for the time being in force.

    2. Exercise due diligence and independent professional judgement/decisions.

    3. Maintain integrity and act in a bonafide manner.

    4. Accept responsibility for their business-conduct and the implications thereof.

    5. Honour their commitment in its letter and spirit and respect the rights and privileges of the counter parties as well as others.

    6. Satisfy themselves about proper identification of the persons they are dealing with in the course of business and avoid any fraud or misrepresentation.

    7. i. Appoint appropriate personnel and provide adequate training.
      ii. Avoid recruitment of any person of doubtful integrity by proper pre-recruitment process.

    8. While out-sourcing the recovery of their dues, take all possible steps to ensure that the agency deployed does not act unscruplously, as it would have adverse consequence for the members.

    9. Extend mutual co-operation and assistance to other members.

    10. Meticulously follow the Code of Conduct and any other instructions issued from time to time by the FIDC.



  6. Accounting Policies and Practices


  7. Members shall

    1. Strictly follow the prudent accounting policies and practices in accordance with generally accepted accounting principles.

    2. Follow, as far as possible, the uniform presentation of accounts adopted in the Sector in respect of all of its business.

    3. Use the commonly accepted terminology in the Sector uniformly.


  8. Relationship with Regulators


  9. Members Shall

    1. Maintain a good rapport with the regulators.

      1. Ensure meticulous and timely compliance with all the regulatory requirements.
      2. Submit in time all reports/returns/statements with all the particulars required by the regulators without fail.

    2. Not suppress material information, even if such disclosure reveals an irregularity.



  10. Relationship with the depositors / Investors / Customers


  11. Members shall

    1. Maintain high standards of integrity in all their dealings and ensure that the personnel deployed also follows the same.

    2. Disclose and inform all the relevant rights and privileges vis--vis the company and also their duties and obligations in respect of the specific transaction.

    3. Avoid making exaggerated claims about the company.


    4. Provide detailed information to the customer in respect of any transaction, especially when requested for.

    5. Have a proper complaint-redressal mechanism for timely and unbiased redressal of complaints.



  12. Relationship amongst members


  13. Members shall

    1. Treat the other member as an integral part of the Sector, useful and necessary for the benefit of all the concerned.

    2. Share relevant information as and when required, discreetly without any bias or ulterior motive.

    3. Avoid unhealthy competition.

    4. Extend any help, assistance and guidance, especially when the other member is either in distress or in need in operational matters.


    5. Discourage unhealthy migration of employees from one NBFC to the other NBFC.


    6. Disclose discreetly information about any employee engaged in any deplorable activitiies.


    7. Avoid confrontation or litigation but adopt consensus either through formal or informal arbitrator in respect of disputes between the members.




  14. Legal Matters
  15. The FIDC shall constitute a legal committee (as a standing committee) to take stock and to monitor litigations across the country, relating to the Sector as a whole. Members should refer all the litigation of a general nature, involving the member to the FIDC for advice and action. After considering the nature of such litigation the legal committee shall deal with the same, in consultation with FIDC and take or adopt appropriate measures as the situation requires/demands in the interest of the Sector as a whole or where it is found necessary and expedient to protect the interest of the concerned member.

  16. Relationship with FIDC


  17. Members shall

    1. Disseminate the Code of Conduct and ensure proper implementation by itself, as well as by all its employees.

    2. Establish internal control of compliance mechanism to ensure the due observance of code of conduct in the organisation as a whole.

    3. Comply with or send all the information/report/returns to FIDC promptly, disclosing true and correct facts and circumstances at all times and at any time required by FIDC.

    4. Seek assistance/guidance/co-operation of FIDC on any issue of generic nature and follow the same so as to achieve the uniform practice in the Sector as a whole.

    5. Volunteer, in case of need, to meet any situation faced by any other member or the Sector as a whole, when FIDC feels the need for the same.


  18. Disciplinary Proceedings


    1. FIDC shall establish a Disciplinary Committee ( standing committee) to deal with any violation or default of the Code of Conduct committed by any member.

    2. FIDC shall refer any violation or default of code of Conduct to the Disciplinary Committee for examination and to propose the course of action in that regard. The Disciplinary Committee shall objectively examine the issue in detail and form an opinion for consideration of the FIDC. There upon the FIDC, after due deliberation shall decide the further course of action in that regard either by dropping the issue or to direct the Disciplinary Committee to proceed with the disciplinary proceeding against the concerned.

    3. After evaluation of the issue involved objectively, by adopting such procedure as it deems fit, the Disciplinary Committee shall recommend the findings and also the proposed penalty and submit the same to the FIDC.

    4. The concerned member shall voluntarily submit to any disciplinary process of FIDC in respect of any violation of the Code of Conduct by the member and desist from any unhealthy practice in that regard.

    5. The FIDC also should ensure that any disciplinary process against any member is without any bias and with the bonafide intention of rectifying the default and also to establish a good image of the Sector as a whole.

    6. During the process, the concerned member should be given proper opportunity of being heard, as and when it is required.

    7. The FIDC may, depending on the nature of defaults or violation and the magnitude of the same as discussed and recommended by the Disciplinary Committee may impose any of the following penalties/punishments on the erring member:

      1. a fine of Rs. 1,000/- with a warning to the member, in case the violation or default is of minor nature.

      2. a fine of Rs. 5,000/- with a warning if the violation/default is of major nature.
      3. a fine of Rs. 10,000/- with warning of expulsion from the membership of FIDC, if the violation/default is of major nature and committed for the second time by the same member.

      4. expulsion from the membership of FIDC under intimation to the regulatory authority, if the violation/default is of major nature, repeated on the third occasion by the same member.

      5. A member against whom a penalty is imposed should comply with the penal action and ensure adoption of the remedial measures, which would, not only be beneficial to the member but also the Sector as a whole.


   
 
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