KYC Policy

1. Preamble:

The Reserve Bank of India (RBI) has issued detailed 'Know Your Customer' (KYC) guidelines to all Non-Banking Financial Companies (NBFCs) following the recommendations by the Financial Action Task Force (FATF) on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). Consequently, FFPL Finance Private Limited(hereafter referred to as "the Company" or “FFPL”) has adopted these KYC guidelines with suitable modifications based on its activities.

The Company has formulated this KYC Policy in alignment with RBI’s Master Direction - Know Your Customer (KYC) Direction, 2016, dated February 25, 2016, and updated as of July 12, 2018.

The Company ensures strict compliance with the Prevention of Money Laundering (PML) Act, 2002, and the Prevention of Money-Laundering (PML) (Maintenance of Records) Rules, 2005, along with RBI’s Master Direction-KYC Direction, 2016, and any subsequent amendments/instructions issued by RBI.

As a non-deposit taking NBFC, the Company is not exposed to many risks associated with deposit-taking companies.

This policy has been approved by the Company’s Board of Directors. Any changes to the policy require the Board’s approval and will be updated as necessary.

2. Objectives, Scope, and Application of the Policy:

a) To prevent money laundering and terrorist financing activities.

b) To enable the Company to know and understand its Customers and their financial dealings better, which helps in managing risks prudently.

c) To implement appropriate controls for detecting and reporting suspicious activities in compliance with applicable laws/procedures.

d) To comply with applicable laws and regulatory guidelines.

e) To ensure that relevant staff are adequately trained in KYC/AML/CFT procedures. This KYC Policy should be read alongside related operational guidelines issued periodically.

3. Key Elements of the Policy:

The Company primarily lends to individuals through it website & LSP Partners, to  facilitates personal loans based on customer details provided via the web login and other communication modes.

This Policy includes the following elements:

a) Customer Acceptance Policy (CAP)

b) Risk Management

c) Customer Identification Procedures (CIP) and Customer Due Diligence (CDD)

d) Monitoring of Transactions

e) Reliance on third-party due diligence

f) Record Keeping

g) Introduction of New Technologies

h) Training Programme

i) Reporting to the Financial Intelligence Unit-India

Designated Director:

The Board has nominated a Designated Director responsible for overall compliance with the obligations under Chapter IV of the Prevention of Money Laundering Act and its rules. The Designated Director’s details have been communicated to the Financial Intelligence Unit, India (FIU-IND). The Principal Officer, mentioned below, will not be nominated as the Designated Director.

Principal Officer:

The Board has nominated a senior officer as the Principal Officer, responsible for ensuring compliance, monitoring transactions, and reporting to the Financial Intelligence Unit (FIU-IND). The Principal Officer’s details have been communicated to FIU-IND.

a) Customer Acceptance Policy (CAP):

The Company’s CAP outlines the criteria for accepting customers. Key guidelines include:

- Not entering into transactions with customers who provide anonymous or fictitious names.

- Not engaging with customers where appropriate Customer Due Diligence (CDD) measures cannot be applied due to non-cooperation or unreliable documents/information.

- Ensuring that the required CDD procedure is followed.

- Avoiding transactions with customers or entities listed in sanction lists circulated by RBI.

- Avoiding transactions with customers engaged in illegal or undesirable activities.

Each new customer’s profile will be prepared during credit appraisal, based on risk categorization. The profile will contain information on the customer’s identity, social status, and employment or business activity, and will be kept confidential.

b) Risk Management:

Customers will be categorized based on perceived risk into three categories – A (High Risk), B (Medium Risk), and C (Low Risk). Due diligence will vary according to the risk category. Enhanced due diligence will be applied to medium and high-risk customers.

c) Customer Identification Procedures (CIP) and Customer Due Diligence (CDD):

The Company will verify each new customer’s identity using reliable, independent sources and will periodically update this information. A Unique Customer Identification Code (UCIC) will be assigned to each customer for better risk profiling.

d) Monitoring of Transactions:

The Company will monitor lending activities, paying special attention to complex or unusually large transactions. Transactions are generally limited to EMI/loan repayments.

e) Reliance on Third-Party Due Diligence:

The Company may rely on third-party due diligence for customer verification, provided the third party is regulated and compliant with KYC norms.

f) Record Keeping:

The Company will maintain transaction records for at least five years and ensure records can be easily retrieved when required by authorities.

g) Introduction of New Technologies:

The Company will ensure KYC procedures are applied before introducing new products/services/technologies to mitigate AML/CFT risks.

h) Training Programme:

The Company will conduct ongoing training programs to ensure staff understand and comply with KYC/AML/CFT procedures.

i) Reporting to Financial Intelligence Unit-India:

The Company will report necessary information to FIU-IND and ensure confidentiality of Suspicious Transaction Reports (STRs).

Annexure I - Customer Identification Procedure and Documents:

The Company will obtain relevant documents from customers for identification, including Aadhaar, PAN, Voter ID, Driving License, and other Officially Valid Documents (OVDs). Verification will be conducted electronically.

Note:

- PAN Cards will be verified through NSDL.

- Aadhaar, Driving License, and Voter ID will be verified through independent agencies.

- Utility bills and passports will be used for address verification.

- Bank statements will be used to verify bank account numbers.

- Customers will be advised to make their payment from a KYC-compliant bank account.

This document outlines FFPL Finance Private Limited’s KYC Policy, which ensures compliance with regulatory requirements and effective risk management.