Muthoottu mini



Companies Act, 2013 and SEBI regulations are primary regulations which provide for regulation
of related party transactions of the Company. SEBI has mandated every listed company to
formulate a policy on materiality of Related Party Transactions and also on dealing with Related
Party Transactions. Muthoottu Mini Financiers Limited (“the Company”) in confirmity wth its
good standard of governance practices conducts its business in a fair and transparent manner duly
complying with the applicable laws as in force.
This Policy is intended to ensure due and timely identification, approval, disclosure and reporting
of transactions between the Company and any of its Related Parties in compliance with the
applicable laws and regulations as may be amended from time to time.
Related Party Transaction:
“Related Party Transaction” is a transfer of any resources, services or obligations between the
Company and a related party, regardless of whether a price is charged. (A transaction with a
related party shall be construed to include single transaction or a group of transactions in a
Related Party:
An entity is considered as related to the company, if:
(i) Such entity is a related party under Section 2(76) of the Companies Act, 2013; or
(ii) Such entity is a related party under the applicable accounting standard.
{Under Section 2(76) of the Companies Act, 2013 “Related Party”, with reference to a company,
a) a director or his relative;
b) a key managerial personnel or his relative;
c) a firm, in which a director, manager or his relative is a partner;
d) a private company in which a director or manager is a member or director;
e) a public company in which a director or manager is a director and holds along with his
relatives, more than two per cent of its paid-up share capital;

f) any body corporate whose Board of Directors, Managing Director or Manager is accustomed
to act in accordance with the advice, directions or instructions of a director or manager;
g) any person on whose advice, directions or instructions a director or manager is accustomed to
Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or
instructions given in a professional capacity;
h) any company which is—
i. a holding, subsidiary or an associate company of such company; or
ii. a subsidiary of a holding company to which it is also a subsidiary;
i) such other person as may be prescribed.
{Under Accounting Standard A “Related Party” is a person or entity that is related to the entity
that is preparing its financial statements (in this Standard referred to as the ‘reporting entity’).
(a) A person or a close member of that person’s family is related to a reporting entity if that
(i) has control or joint control over the reporting entity;
(ii) has significant influence over the reporting entity; or
(iii) is a member of the key management personnel of the reporting entity or of a
parent of the reporting entity.
(b) An entity is related to a reporting entity if any of the following conditions applies:

(i) The entity and the reporting entity are members of the same group (which means that
each parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint
venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the
third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the
reporting entity or an entity related to the reporting entity. If the reporting entity is itself

such a plan, the sponsoring employers are also related to the reporting entity.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a
member of the key management personnel of the entity (or of a parent of the
Key Managerial Person: “Key Managerial Personnel”, in relation to a company, means—
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the Company Secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer; and
(v) such other officer as may be prescribed.
Relative: “Relative” with reference to any person, means anyone who is related to another, if—
(i) they are members of a Hindu Undivided Family;
(ii) they are husband and wife; or
(iii) one person is related to the other in such manner as may be prescribed.
of whether a price is charged.

The guidelines for identification of related party transactions is in accordance with Section 188
Companies Act and relevant rules prescribed thereunder and SEBI Listing Regulations. The
Company will determine whether the transaction is in the ordinary course of business and at arm’s
length basis and for this purpose, the Company will seek external expert opinion, if necessary.
All the transactions which are identified as related party transactions should be pre-approved by
the Audit Committee before entering into such transaction. The Audit Committee shall consider
all relevant factors while considering the related party transactions for its approval.
A related party transaction which is a) not in the ordinary course of business, or b) not at arm’s
length price, would require approval of the Board of Directors or of shareholders as the provided
in this policy.
The Audit Committee may grant omnibus approval for related party transactions which are
repetitive in nature and subject to such criteria/conditions as mentioned in SEBI LODR and such

other conditions as it may consider necessary in line with this policy. Such omnibus approval shall
be valid for a period not exceeding one year and shall require fresh approval after the expiry of
one year.
Omnibus approval of the related party transaction shall specify
(i) name(s) of the related party, nature of transaction, period of transaction, amount of transaction,
maximum amount of transactions that shall be entered into,(ii) the indicative base price/ current
contracted price and the formula for variation in the price if any; and (iii)such other conditions as
audit committee may deem fit;
Audit Committee shall review, on a quarterly basis, the details of related party transactions entered
into by the Company pursuant to the omnibus approval.
In case any related party transactions are referred by the Company to the Board for its approval
due to the transaction being (i) not in the ordinary course of business, or (ii) not at an arm’s length
price, the Board will consider such factors as, nature of the transaction, material terms, the manner
of determining the pricing and the business rationale for entering into such transaction. On such
consideration, the Board may approve the transaction or may require such modifications to
transaction terms as it deems appropriate under the circumstances. Any member of the Board who
has any interest in any related party transaction will rescue himself and abstain from discussion
and voting on the approval of the related party transaction.
If a related party transaction is (i) a material transaction as per SEBI LODR, or (ii) not in the
ordinary course of business, or not at arm’s length price and exceeds certain Thresholds prescribed
under the Companies Act, 2013 and SEBI LODR, it shall require shareholders’ approval by a
special resolution. In such a case, any member of the Company who is concerned related party
shall not vote on resolution passed for approving such related party transaction.
The Company shall disclose, in the Board’s report, transactions prescribed in Section 188 of the
Act with related parties,

The adequacy of this Policy shall be reviewed and reassessed by the Committee periodically and
appropriate recommendations shall be made to the Board to update the Charter based on the
changes that may be brought about due to any regulatory amendments or otherwise.



The Company believes in the conduct of the affairs of its constituents in a fair and transparent
manner by adopting highest standards of professionalism, honesty, integrity and ethical
behaviour. The Company has adopted the Muthoottu Mini Code of Conduct (“the Code”), which
lays down the principles and standards that should govern the actions of the Company and
its employees. Any actual or potential violation of the Code, howsoever insignificant or perceived
as such, would be a matter of serious concern for the Company. The role of the employees in
pointing out such violations of the Code cannot be undermine.


The Company is committed to adhere to the highest standards of ethical, moral and legal conduct
of business operations. To maintain these standards, the Company encourages its employees who
have concerns about suspected misconduct to come forward and express these concerns without
fear of punishment or unfair treatment.


This Whistle Blower Policy (“the Policy”) has been formulated with a view to provide a
mechanism for employees of the Company to raise concerns and to report to the management about
instances of unethical behaviour, actual or suspected, fraud or violation of the company’s code of
conduct. The policy intends to cover serious concerns that could have grave impact on the
operations and performance of the business of the Company. The policy neither releases
employees from their duty of confidentiality in the course of their work, nor is it a route for taking
up a grievance about a personal situation.


The definitions of some of the key terms used in this Policy are given below.
“Audit Committee” means the audit committee formed pursuant to section 177 of The
Companies Act, 2013.
“Committee” means, the committee formed by the Nodal officer under this policy.
“Company” means, “Muthoottu Mini Financiers Ltd.”
“Disciplinary Action” means any action that can be taken on the completion of or during
the course of investigation proceedings, including but not limited to a warning, imposition of fine,

suspension from official duties or any such action as is deemed to be fit considering the gravity of
the matter.
“Employee” means every employee of the Company (working in India)
“Executive Director” means the Whole time Director on the board of the Company.
“Frivolous Complaint” means any complaint which is registered or attempted to be
registered under this Policy with no evidence or on hearsay basis or with malafide intentions
against the subject arising out of false or bogus allegations.
“Good Faith” An employee shall be deemed to be communicating in “good faith if there
is a reasonable basis for communication of unethical and improper practices or any other alleged
wrongful conduct. Good Faith shall be deemed lacking when the employee does not have personal
knowledge on a factual basis for the communication or where the employee knew or reasonably
should have known that the communication about the unethical and improper practices or alleged
wrongful conduct is malicious, false or frivolous.
“Managing Director” means the Managing Director on the board of the Company.
“Nodal Officer” means a Senior Management Person appointed by the Company to receive
protected disclosure from whistle-blowers, conduct inquiry, maintaining records thereof, placing
the same before the Audit Committee for its disposal.
“Protected Disclosure” means a concern raised by a written communication made in good
faith that discloses or demonstrates information that may evidence unethical or improper activity.
Protected Disclosures should be factual and not speculative in nature.
“Policy or This Policy” means, “Whistleblower Policy.”
“Protected Disclosure” means any communication made in good faith thatdiscloses or
demonstrates information that may evidence illegal or unethicalbehaviour, actual or suspected
fraud or violation of the Company's Codes orany improper activity.
“Senior Management” means personnel of the Company who are members of its core
management team (excluding Directors) and who occupy the position of chiefs/heads of various
functions in the Company designated as Associated Vice President and above.
“Subject” means a person or group of persons against or in relation to whom a Protected
Disclosure is made or evidence gathered during the course of an investigation under this Policy.
“Whistle blower” is someone who makes a Protected Disclosure under this Policy.


Various stakeholders of the Company are eligible to make Protected Disclosures under the Policy.
These stakeholders may fall into any of the following broad categories:
Employees of the Company,Employees of other agencies deployed for the Company’s activities,
whether working from any of the Company’s offices or any other location, Contractors, vendors,
suppliers or agencies (or any of their employees) providing any material or service to the Company
Customers of the Company or any other person having an association with the Company.
Aperson belonging to any of the above mentioned categories can avail of the channel provided by
this Policy for raising an issue covered under this Policy.
The Policy covers malpractices and events which have taken place/ suspected to take place
1. Abuse of authority
2. Breach of contract
3. Negligence causing substantial and specific danger to public health and safety
4. Manipulation of company data/records
5. Financial irregularities, including Corrupt business practices, fraud or suspected fraud or
Deficiencies in Internal Control and check or deliberate error in preparations of Financial
Statements or Misrepresentation of financial reports
6. Any unlawful act whether Criminal or Civil
7. Pilferation of confidential/propriety information
8. Discrimination or harassment including sexual harassment
9. Deliberate violation of law/regulation
10. Wastage/misappropriation of company funds/assets
11. Breach of Company Policy or failure to implement or comply with any approved Company
Policy should not be used in place of the Company grievance procedures or be a route for raising
malicious or unfounded allegations against colleagues.


To ensure that this Policy is adhered to, and to assure that the concern will be acted upon seriously,
the Company will:
1. Ensure that the Whistle blower and/or the person processing the Protected Disclosure is not
victimized for doing so
2. Treat victimization as a serious matter, including initiating disciplinary action on person/(s)
indulging in victimisation
3. Ensure complete confidentiality
4. Not attempt to conceal evidence of the Protected Disclosure

5. Take disciplinary action, if any one destroys or conceals evidence of the Protected Disclosure
made/to be made
6. Provide an opportunity of being heard to the persons involved especially to the Subject


The Company reserves the right not to investigate in the following circumstances:
a. Protected Disclosure pertaining to HR related issues viz. salary, performance evaluation etc.
b. Protected Disclosure made without the following mandatory information
i. Name, designation and location of the Subject(s)
ii. Detailed description of the incident
iii. Location and time/duration of the incident
iv. Specific evidences or source of evidences


1. If one raises a concern under this Policy, he/she will not be at risk of suffering any form of
reprisal or retaliation. Retaliation includes discrimination, reprisal, harassment or vengeance in
any manner. Company’s employee will not be at the risk of losing her/ his job or suffer loss in any
other manner like transfer, demotion, refusal of promotion, or the like including any direct or
indirect use of authority to obstruct the Whistleblower's right to continue to perform his/her
duties/functions including making further Protected Disclosure, as a result of reporting under this
Policy. The protection is available provided that:
a. The communication/ disclosure is made in good faith
b. He/She reasonably believes that information, and any allegations contained in it, are
substantially true; and
c. He/She is not acting for personal gain
Anyone who abuses thep procedure (for example by maliciously raising a concern knowing it to
be untrue) will be subject to disciplinary action, as will anyone who victimizes a colleague by
raising a concern through this procedure. If considered appropriate or necessary, suitable legal
actions may also be taken against such individuals.
However, no action will be taken against anyone who makes an allegation in good faith, reasonably
believing it to be true, even if the allegation is not subsequently confirmed by the investigation.
2. The Company will not tolerate the harassment or victimization of anyone raising a genuine
concern. As a matter of general deterrence, the Company shall publicly inform employees of the
penalty imposed and disciplinary action taken against any person for misconduct arising from
Any other Employee/business associate assisting in the said investigation shall also be protected
to the same extent as the Whistleblower.


a) Bring to early attention of the Company any improper practice they become aware of. Although
they are not required to provide proof, they must have sufficient cause for concern. Delay in
reporting may lead to loss of evidence and also financial loss for the Company.
b) Avoid anonymity when raising a concern
c) Follow the procedures prescribed in this policy for making a Disclosure
d) Co-operate with investigating authorities, maintaining full confidentiality
e) The intent of the policy is to bring genuine and serious issues to the fore and it is not intended
for petty Disclosures. Malicious allegations by employees may attract disciplinary action
f) A whistleblower hasthe right to protection from retaliation. But this does not extend to immunity
for involvement in the matters that are the subject of the allegations and investigation
g) Maintain confidentiality of the subject matter of the Disclosure and the identity of the persons
involved in the alleged Malpractice. It may forewarn the Subject and important evidence is likely
to be destroyed
h) In exceptional cases, where the whistleblower is not satisfied with the outcome of the
investigation carried out by the Nodal Officer or the Committee, he/she can make a direct appeal
to the Managing Director of the Company


a) Conduct the enquiry in a fair, unbiased manner
b) Ensure complete fact-finding.
c) Maintain strict confidentiality.
d) Decide on the outcome of the investigation, whether an improper practice has been committed
and if so by whom
e) Recommend an appropriate course of action - suggested disciplinary action, including
dismissal, and preventive measures.
f) Constitute a committee for detailed enquiry if so required.
g) Record Committee deliberations and document the final report.


An employee who knowingly makes false allegations of unethical & improper practices or alleged
wrongful conduct shall be subject to disciplinary action, up to and including termination of
employment, in accordance with Company rules, policies and procedures. Further this policy may
not be used as a defence by an employee against whom an adverse personnel action has been taken
independent of any disclosure made by him and for legitimate reasons or cause under Company
rules and policies.


A Disclosure should be made in writing. Letters can be submitted by hand-delivery, e-mail, courier
or by post addressed to the Nodal Officer appointed by the Managing Director of the Company.
The details of the Nodal Officer is given below

14th Floor, M M Tech Tower
Kaloor, Kochi – 17

Contact number 9037280100, 0484 – 2912209
While there is no specific format for submitting a Disclosure, the following details MUST be
(a) Name, address and contact details of the Whistleblower (including Employee Code, if the
Whistleblower is an employee).
(b) Brief description of the Malpractice, giving the names of those alleged to have committed or
about to commit a Malpractice. Specific details such as time and place of occurrence are also
(c) In case of letters, the disclosure should be sealed in an envelope marked “Whistle Blower” and
addressed to the Nodal Officer.


(a) The Nodal Officer shall acknowledge receipt of the Disclosure as soon as practical (preferably
within 07 days of receipt of a Disclosure), where the Whistle blower has provided his/her contact
(b) The Nodal Officer will proceed to determine whether the allegations (assuming them to be true
only for the purpose of this determination) made in the Disclosure constitute a Malpractice.
If the Nodal Officer determines that the allegations do not constitute a Malpractice, he/she will
record this finding with reasons and communicate the same to the Whistle blower.
(c) If the Nodal Officer determines that the allegations constitute a Malpractice, hewill proceed to
investigate the Disclosure and if necessary, with the assistance of the Whistle Committee, to be
formed by the Nodal Officer, comprising of Senior Management of the company and a
representative of the Department where the breach has occurred. If the alleged Malpractice is
required by law to be dealt with under any other mechanism, the Nodal Officer may refer the
Disclosure to the appropriate authority under such mandated mechanism and seek a report on the
findings from such authority.

(d ) The investigation may involve study of documents and interviews with various individuals.
Any person required to provide documents, access to systems and other information by the Nodal
Officer or Committee for the purpose of such investigation shall do so as required.
(e) Individuals with whom the Nodal Officer or Committee requests an interview for the purposes
of such investigation shall make themselves available for such interview at reasonable times and
shall provide the necessary cooperation for such purpose.
f) If the Malpractice constitutes a criminal offence, the Nodal Officer will bring it to the notice of
the Audit Committee and take appropriate action including reporting the matter to the police.
(g) The Managing Director or Executive Directors of the Company may, at his/her discretion,
participate in the investigations of any Disclosure.
(h) The Committee shall conduct such investigations in a timely manner and shall submit a written
report containing the findings and recommendations to the Nodal Officer as soon as practically
possible and in any case, not later than 30 days from the date of receipt of the Disclosure. The
Nodal Officer may allow further time for submission of the report based on the circumstances of
the case.
(i) Whilst it may be difficult for the Nodal Officer to keep the Whistleblower regularly updated on
the progress of the investigations, he/she will keep the Whistleblower informed of the result of the
investigations and its recommendations subject to any obligations of confidentiality.
(j) The Nodal Officer will ensure action on the recommendations of the Committee/ Officer and
keep the Whistleblower informed of the same. Though no timeframe is being specified for such
action, the Company will endeavor to act as quickly as possible in cases of proved Malpractice.


All reports and records associated with “Disclosures” are considered confidential information and
access will be restricted to the Audit Committee and the Nodal Officer.Disclosures and any
resulting investigations, reports or resulting actions will generally not be disclosed to the public
except as required by any legal requirements or regulations or by any corporate policy in place at
that time.


All Protected Disclosures in writing or documented along with the results of investigation relating
thereto shall be retained by the Company for a minimum period of 05 years.


Upon completion of the Inquiry the Nodal officer shall submit a detailed report before the Audit
Committee on a monthly basis. A quarterly statusreport on the total number of complaintsreceived
during the period, with summary of the findings of the Nodal Officer will also be submitted to the
Audit Committee of the Company.


The Company is entitled to amend,suspend or rescind this policy at any time. Whilst, the Company
has made best efforts to define detailed procedures for implementation of this policy, there may
be occasions when certain matters are not addressed or there may be ambiguity in the procedures.
Such difficulties or ambiguities will be resolved in line with the broad intent of the policy. The
Company may also establish further rules and procedures, from time to time, to give effect to the
intent of this policy and further the objective of good corporate governance.


Muthoottu Mini Financiers Ltd (MMFL)

Approved in BM dated 07/04/2015

In terms of RBI circular no. DNBR/PD(CC)/No. 002./03.10.001/2014-15 dated November 10,
2014, a loan asset of an NBFC should be classified as NPA under the following circumstances
At present, an asset is classified as Non-Performing Asset when it has remained overdue for a
period of six months or more for loans; and overdue for twelve months or more in case of lease
rental and hire purchase installments, as compared to 90 days for banks. In the interest of
harmonisation, the asset classification norms for NBFCs-ND-SI and NBFCs-D are being brought
in line with that of banks, in a phased manner, as given below
Assets other than Lease Rental and Hire-Purchase Assets shall become NPA:
1) if they become overdue for 5 months for the financial year ending March 31, 2016;
2) if overdue for 4 months for the financial year ending March 31, 2017; and
3) if overdue for 3 months for the financial year ending March 31, 2018 and thereafter.
For all loan and hire-purchase and lease assets, sub-standard asset would mean:
1) an asset that has been classified as NPA for a period not exceeding 16 months (currently
18 months) for the financial year ending March 31, 2016;
2) an asset that has been classified as NPA for a period not exceeding 14 months for the
financial year ending March 31, 2017; and
3) an asset that has been classified as NPA for a period not exceeding 12 months for the
financial year ending March 31, 2018 and thereafter.
For all loan and hire-purchase and lease assets, doubtful asset would mean:
1) an asset that has remained sub-standard for a period exceeding 16 months (currently 18
months) for the financial year ending March 31, 2016;
2) an asset that has remained sub-standard for a period exceeding 14 months for the
financial year ending March 31, 2017; and
3) an asset that has remained sub-standard for a period exceeding 12 months for the
financial year ending March 31, 2018 and thereafter.

At present, every NBFC is required to make a provision for standard assets at 0.25% of the
outstanding. On a review of the same, the provision for standard assets for NBFCs-ND-SI and
for all NBFCs-D, is being increased to 0.40%. The compliance to the revised norm will be
phased in as given below:
• 0.30% by the end of March 2016
• 0.35% by the end of March 2017
• 0.40% by the end of March 2018
The Board of Directors of every NBFC granting/intending to grant demand/call loans shall frame
a policy for the company and implement the same.
Such policy shall, inter alia, stipulate the following,
a) A cut off date within which the repayment of demand or call loan shall be demanded
or called up;
b) The sanctioning authority shall, record specific reasons in writing at the time of
sanctioning demand or call loan, if the cut off date for demanding or calling up such
loan is stipulated beyond a period of one year from the date of sanction;
c) The rate of interest which shall be payable on such loans;
d) Interest on such loans, as stipulated shall be payable either at monthly or quarterly
e) The sanctioning authority shall, record specific reasons in writing at the time of
sanctioning demand or call loan, if no interest is stipulated or a moratorium is granted
for any period;
f) A cut off date, for review of performance of the loan, not exceeding six months
commencing from the date of sanction;
g) Such demand or call loans shall not be renewed unless the periodical review has
shown satisfactory compliance with the terms of sanction.”

Normal tenor of a gold loan can be up to a period of 12 months from the date of advance. Interest
is payable at the time of maturity i.e. along with repayment of principal. The loan becomes
overdue one month after the maturity date.
To be categorized as NPA , the loan should have remained overdue (inclusive of unpaid interest)
for a period of six months or more or on which interest amount remained overdue for a period of
six months or more from the due date.

Effectively, a gold loan qualifies to be categorized as NPA from the 17th month, when it remains
unpaid or interest has not been serviced for 16 months from the date of advance or for 4 months
from the date due date during the current year

Prudential norms on income recognition, Asset classification, and provisioning.
Income from NPA is not recognized on accrual basis but is treated as income only when it is
actually received.
Classification of assets and provision requirements
As an NBFC, after taking into account the degree of well defined creditworthiness and extent of
dependence on collateral security for realization, we are required to classify loans and any other
form/s of credit into the following classes:
Standard asset where no default in repayment of principal or interest is perceived and which does
not disclose any problem nor carry more than normal risk attached to the business.
Provision requirements - 0.30% as general provision. This provision should not be reckoned for
arriving at net NPAs .
Sub standard asset is the one that has remained NPA for a period not exceeding 16 months. In
such cases, the current net worth of the borrower or the current market value of the security is
not enough to ensure recovery of the dues.
Provision requirements – general provision of 10%
Doubtful assets are accounts that fall under sub standard category and have remained as NPA for
period exceeding 16 months.
Provision requirements - 100% of the extent to which the advance is not covered by realizable
value of security. In regard to secured portion:
Up to one year after treated as doubtful asset - 20%
One to three years 30%
More than 3 years 50%
Loss assets are those where loss has been identified by us or internal/external auditors or during
RBI inspection but the amount has not been written off wholly or partly.
Accounts with erosion in value of security/ frauds committed by borrowers should not go
through various stages of asset classification
Provision requirements - 100% Provision if not written off

If the realizable value of security is less than 50% of the outstanding, the asset should be
classified as Doubtful and if it falls below 10%, it should be categorized as loss asset.
Advances against gold ornaments, Govt securities are not exempted from provisioning
Management of NPA begins with a better understanding of the underlying credit risk and
initiating corrective measures starting from the branch levels.
Relevant to the nature of our lending operations, reasons for an asset turning bad can be broadly
identified as follows:
1. Laxity in identification of customers’ background and adhering to KYC norms.
2. Lack of proper appraisal and risk assessment
3. Improper / in adequate documentation
4. Incorrect assessment of security
5. In adequate post disbursement follows up.
6. Fraud

Precautions by Various Functionaries

Branch Staff
1. ‘Know your customer’ guidelines should be strictly adhered to before granting loans to
anybody. If KYC requirements are not complied with in respect of existing borrowers, Managers
should take necessary steps to ensure compliance with KYC norms immediately.
Special attention to be given to the following:
a. The address in the ID proof and that in our records as given at the time of granting of loan
should be same. Discrepancies, if any, shall be adequately questioned and satisfactory
explanation to the same shall be obtained.
b. Frequent contact with the borrowers, particularly in the case of high value loans of say 1 lakh
and above through personal visits and face-to-face discussions with the borrowers may be
undertaken for ensuring prompt repayment of loans.
c. The quality of the gold ornaments shall be checked/ tested, before accepting the same as
security for the loan, by the employee responsible for the same. Weight of the extraneous items
should be assessed properly and shall be reduced from the gross weight of the gold ornament.

Net weight of the gold ornament shall be taken into consideration for arriving at the allowable
maximum limit of loan.
d. DPN shall be fully filled up and properly executed by the borrower.
e. The branch staff should be vigilant enough to be aware of developments in the area to identify
and avoid undesirable customers with dubious past track records.
f. All the other laid down systems and procedures should be followed strictly.
Internal Audit Team
The Internal Audit team shall verify and cross check the following during the internal audit of a
1. Gold loan packets of outstanding accounts with the pledge notes.
2. The contents, weight and purity of gold ornaments pertaining to all the outstanding loans.
3. Compliance with KYC norms in respect of all the accounts.
4. Proper reduction for extraneous items is done for all eligible gold loan accounts.
5. Scale of finance is as per the prescribed rates.
6. All documents are properly executed.
7. All prescribed systems and procedures are complied with.
Regional Manager
1. Regional Managers will have to positively verify at random, the purity of gold
ornaments taken as security during their visit to branches.
2. They have to also verify whether KYC norms are complied with in respect of all the
3. Any discrepancies noted in the compliance of prescribed systems and procedures have to
be reported to the higher authorities.
4. Ensure that all instructions are being followed by all branches under his control.
Corporate Office
1. Random check on the above, whenever a CO functionary visits a branch.
2. Time bound action on rectification as required.
Recovery of Non Performing Assets
All loans outstanding beyond the loan validity will be disposed off within three months from the
expiry of the loan period. In order to undertake this, the company requires a well oiled gold loan
monitoring, follow-up & disposal mechanism in place. With a view to have a proper monitoring

mechanism, we have already set up an Overdue Loans Cell at Corporate Office under Chief
Operating Officer. The OLC will interact with branches & their controllers for speedy recovery
of all loans which has exceeded the stipulated loan tenor. Since disposal of gold loans through
individual branches is not feasible, due to small numbers and the high cost of auctioning, it will
be desirable to dispose them off through a centralized disposal set up. The operational workflow
for a centralized GL disposal set up will be
a) Identification of potential overdue gold loans by OLC of Corporate Office and advising
them to concerned branches
b) Sending first notice to borrowers latest by 15 days prior to the loan becoming overdue
c) Personal visit by branch manager/ staff member on the defaulting customer within 7 days
from the date of notice
d) If no result forthcoming, serving of second repayment notice after a maximum gap of 15
days from the date of personal visit and/or the first notice
e) If the loan remains outstanding even after this, takeover of the gold ornaments by the
Regional Manager within a span of one month and transfer the loan account to Corporate
Office overdue Loan Pool account
f) All gold loans & underlying ornaments taken over by the RM should be either be
auctioned at the HQ branch if sizeable number of loans are available or will be
transferred to specified auction centres periodically.
g) At any point of time before the loan is transferred to Auction centre, in case the borrower
approaches the company for redemption of pledged ornaments, this will be carried out by
the concerned branch (Originating or HQ) in the normal manner
h) Auctions will be carried out only after publishing the auction date and venue in two
vernacular dailies being circulated in the area of concerned branches. Also the concerned
branches will also display the auction date and centre in their notice boards well in
i) As further concession to customers, the company may also consider settlement of loan
dues by way of concessions in interest as a one-time settlement on a case-to-case basis
with approval from Corporate Office
Auction Procedure for overdue gold
All loans outstanding beyond the loan validity will be disposed off within three months from the
expiry of the loan period. In order to undertake this, the company requires a well oiled gold loan
monitoring, follow-up & disposal mechanism in place. With a view to have a proper monitoring
mechanism, we have already set up an Overdue Loans Cell at Corporate Office under Chief

Operating Officer. The OLC will interact with branches & their controllers for speedy recovery
of all loans which has exceeded the stipulated loan tenor.
Appointment of an Auctioneer
Since as per the revised RBI guidelines, the company or its promoters cannot participate actively
in the auction, a qualified and experienced auctioneer will be appointed by the company to carry
out the auction on behalf of the company. The broad terms of engagement of an auctioneer will
be as under
1) The auctioneer should have a minimum 10 years experience in gold trade and has proper
2) The company will give full list of articles to be auctioned to the auctioneer who will have to
furnish the details of auction as per the format given by the company
3) The auction proceeds should be credited to the Company’s account within a maximum period
of 30 days from the date of auction
4) The auctioneer and company will enter into a written agreement for conducting the auction
5) The fees payable to the auctioneer will be pre-fixed subject to a ceiling 5% of the auction
6) The name of the auctioneer will be approved by an internal committee of the company
comprising of Managing Director (Chairperson), Executive Director & CFO as members and
COO as member secretary
7) The auctioneer’s tenure will be one year with reappointment every year
Approved Auction Procedure
The company shall have a transparent policy approved by the board for auction of pledged
assets. On completion of prescribed loan period, or whenever probability of a short fall in the
realizable value of the asset pledged at the prevailing market rate from the total dues payable by
the pledger arises, the account will be treated as NPA and assets pledged shall be sold by public
auction after issuing notice to the loanee/pledger. The criteria for selection of accounts for
auction shall be based on probable loss taking in to account the prevailing market price of the
pledged asset. All auctions shall be conducted through independent professional auctioneers
appointed by the company and approved by the Board for the same. As a matter of policy the
company or its promoters or promoter entities themselves shall not participate in the auctions
held. The auction procedure in case of non– repayment shall be transparent. Prior notice to the

borrower as described above shall be given before the auction and there shall not be any conflict
of interest. The auction process shall ensure that an arm's length relationship in all transactions
during the auction is maintained including with group companies and related entities.
The following procedure shall be followed for conducting the auction.
a) Auctioneer shall serve an auction notice to the pledger by registered post A/D intimating the
date of auction before 21 days of the proposed date of auction.
b) Advertisement showing the details of accounts listed for auction with date, time and venue
shall be issued in at least two prominent Local News Paper, one in a vernacular language and the
other in a national daily by the auctioneers.
c) The pledger shall be given an opportunity to redeem the gold after paying the loan dues till the
close of business hours of the preceding working day of the date of proposed auction.
d) Unredeemed ornaments shall be sold in public auction by the auctioneer in the presence of
Company officials.
e) Such public auctions shall be held only when reasonable number of bidders participates in the
auction and the same may be conducted either in the branch locality or in the Taluka or District
Head Quarters
f) Depending on the quality of gold placed for auction, the pledged ornaments should be
auctioned off at a price close to the prevailing market price on the day of auction. For
implementing the same, the company should provide for a reserve price for auction.
g) The bid shall be confirmed then and there in favour of the bidder quoting highest rate. h) Bids
for substantially lower amounts than the market rates shall not be confirmed unless a declining
trend in the Gold Market is envisaged.
i) The pledger also can participate in the bid as a bidder after remitting the earnest money deposit
fixed by the auctioneer for each auction.
j) Full records of the auction with particulars such as date, venue, and bidders participated,
details of Sales made with rate, bid amount and highest bidder in whose name the bid has been
confirmed etc. shall be maintained and preserved for auditors/inspectors to verify.
k) After completion of the auction process, following details shall be intimated to the customer
whose ornaments have been auctioned off by means of a registered letter: 1) Value fetched in
the auction
2) Outstanding Dues fetched and
3) Balance, if any payable to the Customer

l) Pledge account shall be settled from the auction proceeds after paying the mandatory taxes and
auctioneers commission. In doing so the necessary compliance with Sales Tax laws of the state
in which the auction is conducted shall be ensured;
m) Following details regarding the auctions conducted during the year shall be disclosed in the
Annual Report of the Company:
i) No. of Auction Conducted
ii) No. of Loan Accounts involved
iii) Outstanding value in loan accounts involved
iv) Value fetched in auction
v) Balance amount refunded
vi) Balance amount recovered from the borrower
vii) Whether the Company participated in the auction, if yes, details of bids, value of jewellery etc.
n) The Company, at its discretion, may initiate legal recourse for recovery of the shortfall in loan
dues after serving a demand notice, at the discretion of the company based on the feasibility of
o) Surplus fund, if any, available in the auction of pledged ornaments after setting off all dues of
the company, taxes and the auctioneer’s commission shall be passed on to the pledger under
receipt .
p) Ornaments pledged under Special Schemes with shorter pledge durations shall be listed for
auction on completion of the agreed loan period, if the loan is not closed within the said period.
Spurious/low quality gold
In case of loan accounts becoming NPA because of the security being spurious or of low quality
a proper investigation has to be initiated immediately to examine the staff accountability. If there
is deviation from the laid down instructions then the recovery has to be effected from the
concerned employee/(s). Concurrently the Branch Team has to contact the borrower and recover
the money using our usual methods including legal procedures. If there are no lapses on the part
of the employees, then the borrower has to be proceeded against legally to recover our dues.
Stolen/ thondy articles
In case of loan accounts becoming NPA on account of the security being confiscated by the
police with respect to any crime or as stolen gold, the Branch Team has to immediately contact
the borrower/his family members and resort to hard core recovery measures. If the dependants of
the borrower are in penury condition then, the outstanding has to be assessed for the purpose of

write off. An enquiry has to be conducted to examine staff accountability, if any, which
contributed to the loss to the company. If there are any lapses found in the enquiry, then the
delinquent staff should make good the amount as per the report of the enquiry officer.

Other reasons including fraudulent acts
In all other cases, staff accountability should be examined and if any lapses are found then the
delinquent staff should be made responsible for the loss and he/she should be made responsible
for the loss in proportion to his/her responsibility. The time lines for such staff accountability
exercise should be same as laid down in our policy on frauds.
Provisioning and write off
On the basis of guidelines of RBI as outlined above, provisioning requirements should be
assessed at Corporate Office depending on the financial status of an account. In the case of loss
assets, proposals should be submitted to the board for approval for write off. Wherever the CO
feels that there could still be a possibility for recovery, 100% provisioning has to be done in such
Asset categorization and provisioning requirements should be ideally reviewed on a quarterly
basis and to be submitted to the board for approval. Write off proposals can be taken up on an
annual basis, during the last quarter of a financial year.
Staff accountability
As listed above, reasons for an asset drifting to the non performing category are primarily on
account of laxity in exercise of controls and lack of follow up at the branch level itself. Staff
collusion is also a major reason. It has hence become necessary to define staff accountability in
such cases. The time lines for such staff accountability exercise should be as per guidelines laid
down in our policy on frauds.
Even at the occurrence of an asset sliding to the Sub standard category, the BM, duly guided by
the respective RM must initiate steps to regularize the account and recorded proof should be
retained at branch levels for scrutiny by RM/ Audit/ CO officials. Every branch auditor should
review these records and comment in their respective reports.
Relevant provisions of our fraud policy will be applicable with regard to disciplinary proceeds
against the staff.

Quality assurance will be made part of performance management of staff at all level.

AML Policy

Anti Money Laundering Standards
Approved in BM dated 27/08/2014

Money Laundering is a process by which money or other assets obtained as proceeds of crime
are exchanged for “clean money” or other assets with no obvious link to their criminal origins.
The offence of Money Laundering has been defined in Section 3 of the Prevention of Money
Laundering Act, 2002 (PMLA) as “whosoever directly or indirectly attempts to indulge or
knowingly assists or knowingly is a party or is actually involved in any process or activity
connected with the proceeds of crime and projecting it as untainted property shall be guilty of
offence of money-laundering.”
We consider it our moral, social and economic responsibility to prevent misuse of the financial
system for laundering proceeds of criminal activities and to coordinate the global war against
money laundering. Our role in curbing this global reality begins with stringent Know Your
Customer procedures.
Recognising the true spirit behind the initiatives of RBI and other Controls, we have resolved to
conduct day - to - day business with due skill, care and diligence and seek to comply with both
the letter and spirit of relevant laws, rules, regulation, codes and standards of good practices.

The purpose of this paper is to seek Board’s approval on updated standards, based on RBI
guidelines and developments in the financial market.
1. Customer Identification Procedure – “Know Your Customer” norms.
2. Recognition, handling and disclosure of suspicious transactions
3. Appointment of Principal Officer (PO)
4. Staff Training
5. Maintenance of Records

6. Audit of Transactions
1. “Know Your Customer” norms
As part of AML initiative, we will strictly enforce and follow the provisions of extent KYC
policy guidelines approved by the board, encompassing:
Customer Acceptance Policy
Customer Identification Procedures
Monitoring transactions
Risk Management
2. Recognition & Reporting of Suspicious Transactions.
A transaction may be of suspicious nature irrespective of the amount involved. An indicative list
of suspicious activities is given below:-
- Customer is reluctant to provide details/documents on frivolous grounds
- The transaction is undertaken by one or more intermediaries to protect
the identity of the beneficiary or hide their involvement
- Large cash transactions
- Size and frequency of transactions is high considering the normal business
of the customer
- Change in the pattern of business transacted.

The above list is only indicative and not exhaustive.
When the staff comes across a suspicious transaction, they should
1. Ask questions about the source of funds and other details
2. Check the Identification documents carefully
3. Report immediately to the PO
Principal Officer (PO)

The PO’s primary responsibility is to oversee and ensure overall compliance with regulatory
guidelines on KYC, AML/CFT issued by RBI from time to time. The PO will also be responsible
for reporting of suspicious transaction/s to the Financial Intelligence Unit (FIU). Any suspicious
transaction/s, if undertaken, should have prior approval of PO. The PO shall have reasonable
access to all the necessary information/documents, which would help him in effective discharge
of his responsibilities.
The responsibility of the PO may include:
* Putting in place necessary controls for detection of suspicious transactions.
o Receiving disclosures related to suspicious transactions from the staff or
o Deciding whether a transaction should be reported to the appropriate
o Training of staff and preparing detailed guidelines / handbook for
detection of suspicious transactions.
o Preparing annual reports on the adequacy or otherwise of systems and
procedures in place to prevent money laundering and submit it to the Top
Management within 3 months from the end of the financial year.
Chief Audit Manager is nominated as the PO for MMFL.
3. Staff Training
All the managers and staff must be trained on an ongoing basis, to be aware of the policies and
procedures relating to prevention of money laundering, provisions of the PMLA and the need to
monitor all transactions to ensure that no suspicious activity is being undertaken under the guise
of money changing.
The steps to be taken when the staff come across any suspicious transactions (such as asking
questions about the source of funds, Checking the Identification documents carefully, reporting
immediately to the PO, etc.) should be carefully formulated and be part of any staff training
programme on the subject.
Periodic training of staff at all levels across group companies is being made a part of the training
4. Xpress Money transactions

The AML Guidelines are applicable to us as franchisees of AMCs and it is our responsibility to
adhere to the AML Guidelines and the Know Your Customer norms shall be strictly followed in
these transactions.
All transactions are to be undertaken only after proper identification of the customer.
Photocopies of Proof of Identification should invariably be retained by the Branch after verifying
the relevant document in original.
Full details of name and address as well as the details of the identity document provided should
also be kept on record. If a transaction is being undertaken on behalf of another person,
identification evidence of all the persons concerned should be obtained and kept on record.
Branches shall be guided by extant guidelines issued on KYC norms.
Maximum amount allowed under a single transfer is rupee equivalent to USD 2500/-.
Only person to person remittances are permissible under money transfer scheme.
The purpose of remittance has to be for domestic use / family maintenance.
Remittances for other purposes like trade or commercial, charitable trust, donation etc. are not
The maximum amount a beneficiary can collect in cash in a day is Rs. 50,000/-. More than one
transaction shall not be paid to a single beneficiary in cash on a day.
Any payment above Rs. 50,000/- shall be effected by A/C payee cheque/ draft or pay order for
the entire amount of remittance, less applicable charges, if any.

The following documents are to be preserved for a minimum period of ten years.
o Records including identification obtained in respect of all transactions.
o Statements/Registers prescribed by the Reserve Bank from time to time
o All Inspection/Audit/Concurrent Audit Reports
o Annual Reports of the PO submitted to the Top Management on the
adequacy or otherwise of systems and procedures in place to prevent
money laundering.
o Details of all suspicious transactions reported in writing or otherwise to the

o All correspondence / reports with the appropriate authority in connection
with suspicious transactions.
o References from Law Enforcement Authorities, including FIU, should be
preserved until the cases are adjudicated and closed.
The Auditor should check all transactions to verify that they have been done in compliance with
the anti-money laundering guidelines and have been reported as required. Compliance on the
lapses, if any, recorded by the concurrent auditor should be put up to the Board.
A Certificate from the Statutory Auditor on the compliance with AML guidelines should be
obtained at the time of preparation of the Annual Report and kept on record.
Reporting of Suspicious Transactions
Suspicious transaction means a transaction that gives rise to a reasonable ground of suspicion
that it may involve the proceeds of crime; or appears to be made in circumstances of unusual or
unjustified complexity; or has no economic rationale or bona fide purpose;
It is the duty of all staff to report suspicious and unusual transactions to the PO through Branch
Manager under copy to the respective Regional Manager.
Failure to report suspicious and unusual transaction to the Reporting Officer, as prescribed, shall
attract legal and disciplinary action.
PO shall investigate and forward the "STR" (Suspicious Transaction Report) to relevant
authorities in writing or by fax or electronic mail within the stipulated period, through the
Executive Director. A copy of the same shall be retained by the Reporting Officer for the
purpose of official records.
Monitoring and Control
BMs shall be responsible for the execution and implementation of the Regulations issued by the
Reserve Bank of India and our Anti Money Laundering policies & Procedures at the branch
levels. They shall also be responsible for reporting any suspicious transactions directly to the PO.
2.3 The internal auditor shall mention, in the audit report, on the efficacy of the implementation
of the policy, procedures and control.
Record Keeping

The objective of record keeping is to ensure that we are able to provide the basic information
about customer and to reconstruct the individual transactions undertaken at the request of the
relevant authorities at any given time.
The record must contain the following information: (a) nature of Transaction, (b) amount of the
transaction and the currency in which it was denominated (c) date on which the transaction was
conducted and (d) parties to the transaction.
Transaction records should be kept for a minimum period of ten years and made available to the
relevant authorities as and when demanded.
The documents may be retained in original or stored on microfilm or in the computer at the
respective branches.
New Staff Recruitment Procedure
The H R Department will check the antecedences of all new employees by checking their
references. They will also perform background checks on employees.
AML Compliance Undertaking will be taken from each and every employee.
Training for all employees shall be conducted periodically. During all trainings, the employees
shall be communicated of their responsibility as per the law in force regarding obtaining
sufficient evidence of identity, recognizing and reporting knowledge or suspicion of money
laundering and terrorists financing. The employee shall always be trained on the potential effect
on us, on its employees and customers if there is any breach of law or regulations.

The CO HR Department is also required to maintain records showing the dates when Anti-
Money Laundering training has been given, the nature of the training and the names of the staff

who have received the training.
Privacy Policy
MMFL shall be committed to respect and protect the privacy of its customers. The personal
information about our customers provided on applications forms are for facilitating customers’
transactions. Any such information collected from the customer shall be kept confidential. It
shall be passed on to a statutory body only in accordance with the existing laws.



Muthoottu Mini Financiers Limited ( MMFL) , a company registered as systematically important
non deposit taking NBFC with Reserve Bank of India, is predominantly engaged in the business
of lending against house hold jewellery. MMFL’s funding consists of both short term and long
term with different maturity patterns and varying rates of interest. Its assets also are of varying
duration and interest. Hence, maturity mis- matches can occur which has an impact on the liquidity
and profitability of the company. It is therefore necessary that MMFL constantly monitors and
manages its asset and liability in such a manner that asset liability mismatches remain within
reasonable limits. This is also a statutory obligation as RBI as the regulating agency for NBFCs
has stipulated that NBFCs should have an effective Asset-Liability Management (ALM) system
as part of their overall system for effective risk management. .
Objective and Scope
This objective of this policy is to create an institutional mechanism to compute and monitor
periodically the maturity pattern of the various liabilities and assets of MMFL to
(a) ascertain in percentage terms the nature and extent of mismatch in different maturity buckets,
especially the 1-30/31days bucket, which would indicate the structural liquidity
(b) the extent and nature of cumulative mismatch in different buckets indicative of short term
dynamic liquidity and
(c) the residual maturity pattern of assets and liabilities which would show the likely impact of
movement of interest rate in either direction. on profitability. This policy will guide the ALM
system in MMFL.
(d) finalising the interest rates and tenure for new gold loan products of the Company
An efficient ALM needs
(a) a good information system
(b) a policy for the company setting limits for liquidity, interest rate
(c) a Committee of Senior functionaries for ensuring adherence to the limits approved by the Board
of Directors and
(d) a well defined process. MMFL, branches are networked under a core system and accurate,
adequate and realtime information is available on a centralized basis.

Asset- Liability Management Committee (ALCO):
Asset- Liability Management will beoverseen by a Committee consisting of the following officials.
Chairmanand wholetime Director – Mrs. Nizzy Mathew- Member and Chairperson of
Managing Director- Mr Mathew Muthoottu- Member
Chief Operating Officer –Mr. George Varghese-Member representing Risk Management
Chief Financial Officer – Ann Mary George -Member representing Finance and Accounts
Company Secretary shall act as the secretary of the Committee
Quorum: The Chairman, one of the Executive Directors and one other member will constitute the
Reserve Bank of India has stipulated templates for reporting Structural liquidity (ALM-1).
Dynamic Liquidity (ALM-2) and Interest Rate Sensitivity (ALM-3). RBI has issued guidelines for
Asset Liability Management (ALM) system in NBFCs .They have also provided indicative
formats as per Appendix I and Appendix II for compiling the figures. ALCO will use the indicative
formats for compiling the figures and the Reports on ALM 1, ALM 2 and ALM3 for reviewing
the liquidity and interest rate risk.
Periodicity of Meeting:
The Secretary will arrange for convening the meetings of ALCO once a month or as and when
needed depending upon the necessity.
Discussion paper covering the following areas will be deliberated byALCO namely
· Liquidity risk management
· Management of market risk
· Funding and capital planning
· Profit planning and growth projection
· Forecasting and preparation of contingency plans
Minutes of the meeting will be prepared and preserved and the same shall be put up to the Board
for their perusal.

Liquidity Risk Management:
ALCO will deliberate on the ability of MMFL to meet its maturing liabilities as and when they
become due and ensure against any adverse situation from developing. ALCO will review on an
ongoing basis how the situation is likely to develop under different assumptions. For measuring
and managing net funding requirements, ALCO will use as a standard tool the maturity ladder and
calculation of cumulative surplus at selected maturity dates.
For this purpose, the templates ALM-1 and Appendix I will be made use of. ALCO will use the
same time buckets suggested by RBI (shown below) for measuring the net funding needs.
i)1 day to 14 days
ii)14 days to 1 month
iii)Over 1 month to 2 months
iv)Over 2 months to 3 months
v)Over 3 months to 6 months
vi)Over 6 months to 1 year
vii)Over 1 year to 3 years
viii)Over 3 to 5 years
ix)Over 5 years
Reserve Bank of India has stipulated that the cash outflows in the 1-30/31 buckets should not
normally exceed the cash inflows by more than 15%. Higher ceiling, for any special reason, need
specific approval of the Board. As a prudent liquidity management measure, MMFL will strive to
restrict the negative mismatch in the 1-30/31 days bucket to a maximum of 15% of cash outflows.
ALCO will also deliberate on the estimated short term dynamic liquidity profile based on the
business projections and other commitments and plans of the Company. The cumulative negative
gap will be restricted to not more than 15% of the cash outflows.
Interest Rate Risk:
Gold loans constitute more than 99% of MMFL assets, RBI has given operational flexibility to
NBFCs for pricing most of the assets and liabilities. Board, however, has fixed an internal ceiling
of 26% as maximum interest on gold loans. The major portion of MMFL liabilities consists of
subordinate debt and Non Convertible debentures both public and private where the interest rate
is fixed .

The Company also has Bank borrowings which reprices without a perceptible time lag with
changes in market interest rates. Assets on the other hand trail behind slightly in repricing and are
also bound by the ceiling stipulated by the Board. MMFL Net Interest Margin and Profitability
therefore rises when interest rate decreases. The interest sensitive assets and liabilities will be
clubbed into the following buckets for ascertaining the Gap in individual buckets and the
cumulative Gap.
i)1 day to 14 days
ii)14 days to 1 month
iii)Over 1 month to 2 months
iv)Over 2 months to 3 months
v)Over 3 months to 6 months
vi)Over 6 months to 1 year
vii)Over 1 year to 3 years
viii)Over 3 to 5 years
ix)Over 5 years
The Indicated template Appendix II and Reporting Format ALM-3 will be used for computing
the Gaps in each time bucket.
If at any time a negative Gap were to arise ALCO will ensure that such Gap, individual as well
as cumulative, do not exceed 15%
Enclosures: RBI guidelines with indicative Appendix I & II, Reporting Formats ALM 1, ALM2
& ALM 3


Muthoottu Mini Financiers Limited

The core business of MMFL consists of lending against the collateral security of gold
ornaments. For this purpose, the company has formulated various loan schemes. Under
these schemes, loans are granted for a maximum tenure of 12 months. As per these
schemes, the borrowers are to repay the loan amount together with accrued interest latest
by the end of the tenure fixed. Most of the borrowers repay the loan in the normal course
and in some cases reminders/notices are sent by the Company. Inspite of these efforts, a
small percentage of borrowers fail to repay the loan within the normal tenure.
Consequently, the only option left for the company is to settle such overdue accounts by
means of a public auction and realize its dues.
A) Norms for Identification of Accounts for Auction.
i) All accounts in which interest remains unserved in full and if the loan is not closed at
the end of tenure in various schemes, it will be identified and listed as “eligible for auction
ii) An account which has been classified as a NPA account in accordance with policies laid
down by the company; or
iii)Accounts that have not completed loan tenure, but having a substantial erosion in the
realizable value of the security to cover the dues i.e. Mark to Market cases (MTM Cases)
may be taken up for auction in case all recovery initiatives fails.
B)Intimation to the borrowers, Periodicity for Sending notices.
1. Once an account has been identified as “eligible for auction accounts” a notice in
the local language shall be sent to all “auction accounts” by registered post with
acknowledgement card requesting the borrower to immediately pay the full dues.
2. With a view to reduce the number of auction identified accounts and as a measure
of customer service, the Company shall send a registered auction notice with
acknowledgement due 30 days from the due date, requesting the borrower to
immediately pay the full dues, failing which the security would be liable to be put
on public auction, without further notice, for recovery of dues.

3. When such letters are returned undelivered, intensive action should be taken to
locate the borrower, reconfirm the KYC documents and re-evaluate the security. The
responsibility for ensuring the compliance would vest with the branches.

4. The acknowledgement card or unopened (returned undelivered letters), as
applicable, should be preserved and systematically stored for easy future retrieval.
The responsibility for ensuring the compliance with the above policy guidelines
shall vest with the respective Regional Managers.
5. Organizational structure for auction
The Company shall have a dedicated Asset Quality Department at Corporate office to
initiate, supervise and monitor the auction procedures. The department will function under
the overall control of Chief Operating Officer. Official from the Asset Quality Department
should be present and oversee the actual auction proceedings and will be entrusted the
responsibility for the proper conduct thereof.
6. Auction Centers and Movement of Auction packets.
i) The auction should be conducted in the same branch or taluka where the branch is
ii) Approval of Auction centers shall be accorded jointly by the Head of the Operations
department and Chief Operating Officer, based on the recommendations of the Regional
Heads through Asset Quality Department. The number of auction centers in a state will be
on need basis.
iii) Auction Centers should be provided with appropriate, adequate and functional
infrastructure such as space, storage arrangements, CCTV cameras, electronic weighing
balance etc.
iv) Physical movement of “auction accounts” from various branches to auction centers
shall be done by the authorized employee/s of the branch. “The authorized
employee/s” shall be decided by the RM considering the quantum, distance, terms
and conditions as instructed in the Transit Insurance Policy schedule.
v) Dedicated auction team with Gold appraiser/s and auditor shall receive auction
packets from branches as per the schedule given by the Asset quality department.
Verification, lot creation and grading shall be done by the auction team as and when
the packets are received and kept under the joint custody of Auction team and
RM/Auditor concerned.

7. Auction Announcement:
The list of accounts taken up for auction shall be announced through advertisement in
National daily and in a vernacular language. Such notification in the newspapers should be
published at least 14 calendar days before the scheduled auction date. Copy of the auction
advertisement shall be displayed in the branch and the respective regional Managers should
ensure the compliance, monitored by the Asset Quality Department.

8. Public auction, Creation of Convenient lots.
i) The company shall resort to realization of the “auction accounts” only through Public
auction in “as is where is” and “as is what is” condition except as otherwise stated in the
auction policy.
ii) Gold loans taken up for auction must be segregated in to convenient lots to facilitate
easy disposal based on the various factors such as purity, quantity, expected number of
bidders and prevailing market rate of Gold.

iii)Each lot shall be separately taken up for auction for security reasons and better
iv)Bidders have the right to inspect the lot before commencement of auction in the presence
of authorized officers of the company and approved auctioneer.
v) Adequate insurance coverage and security arrangements must be arranged in advance
considering the quantity and number of participants involved.
vi)The proposal for fixing the reserve price for each auction shall be above 85% of the
previous 30 day average closing price of 22 carat gold as declared by the Bombay Bullion
Association Ltd (Now India Bullion and Jewelers Association Ltd) and the value of the
jewelry of lower purity in terms of carat should be proportionately reduced.
vii) When there are no bidders at the reserve price fixed, the reason therefore shall be
ascertained and the auction will start from the highest closed bid from the participants.
9. Legal, Low quality and Spurious accounts:
i) Pledge gold having legal complications due to disputes, legal cases and deceased
accounts etc. shall not be taken up for auctions under normal circumstances. Such accounts
shall be dealt on a case to case basis with the recommendation from legal Dept., operation
Dept. and approval from Managing Director.
ii) In normal course, branch will ascertain the purity of the collateral security (Gold)
before sanctioning the loan, but due to misjudgment at the time of sanctioning the loan,
there is a chance for low quality or spurious items accepted as collateral security. In such
instance, branches shall send one registered notice to the customer, as and when such item
is identified and if there is no chance for normal recovery or legal recovery, such accounts
may be auctioned. Legal and Operation Departments should also certify that there is no
chance for recovery either by normal or legal course.
iii) Spurious and low quality accounts may be included in the public auction as separate
and convenient lots on “as is what is basis” based on the reserve price arrived at internal

and external valuation (if required) by trained appraisers. If the realized amount is less than
the total outstanding amount of the loan (inclusive of interest and auction charges), the
deficit shall be written off in case all the other recovery measures fail.
iv) When there are no bidders at the reserve price fixed, the reason shall be ascertained
and the auction held once again after collecting the highest quote in the closed bid form
from the Bidders.
10. Earnest Money Deposit (EMD) and Documents to be submitted by the Bidder:
i) All participants have to pay a reasonable amount of EMD and not exceeding Rs. 5
lakhs on such date as maybe decided by the management from time to time.
ii) Proper KYC documents and PAN card shall be submitted by every participant. If the
participant is representing a Company/firm, proper authorization, copy of registration,
including GST Registration details and PAN card of the company shall be submitted
to participate in the auction in addition to the Participants’ KYC documents.
iii) Person, entities having known criminal background shall not be allowed to participate
in the auction.
iv ) The company or any of its related entities shall not participate in the auction
11. Empanelment of auctioneers, their responsibilities and Qualification.
i) Auction shall be carried out only through Auctioneers empaneled by the Company
with the approval of the Board of Directors. In centers, where such Auctioneers are
not available the auction must be conducted by
a. Lawyers with more than one year experience.
b. Professionally qualified, work experience with auction and related activity in any
financial Institution or Bank for more than 3 years.
ii) The charges, fees payable to the auctioneers shall be fixed after proper internal
approvals and reviewed periodically.
iii) Considering the number of auctions and the availability of auctioneers, company
reserves the right of empanelling one or more auctioneers in an area.
12. Self-Bidding and Disclosure in the Annual Report and refund of Surplus,
recovery of Shortfall
i) MMFL or any of its related entities shall not participate in the public auctions.
ii) The company will disclose in its annual report the details of the auctions conducted
during the financial year including the number of loans, outstanding amount and Value
iii)After full receipt of auction sale proceeds, appropriate accounting entry will be passed
in the customer accounts.
iv)If there is any surplus, after adjusting outstanding loan amount, auction related
expenses and notice charges arising in the individual account, should be refunded to
the borrower, either through crossed cheque or electronic fund transfer irrespective

whether a claim is made or not, within three months from the closure of the said
v) However if the borrower has other unsettled liability to the company, the surplus
amount shall be adjust to such account/s.
vi)Company reserves the rights to recover the auction deficit through normal as well as
legal action against borrowers after analyzing the cost benefit.
13. Registers and Records of Auction
i) All registers and records relating to public auction will be kept in the auction center
under the joint custody of RMs concerned and bid confirmation, lot details, KYC and
authorization, newspapers, copy of participants register and lot register will be kept at
the corporate office under the custody of Asset quality department, subject to
periodical internal audit.

KYC Policy

'Know Your Customer' Policy

The objective
KYC guidelines are to prevent financial institutions from being used, intentionally or
unintentionally, by criminal elements for money laundering activities. KYC procedures
also enable us to know/understand the customers and their financial dealings better which
in turn help us manage the risks prudently.
Four Key elements
1. Customer Acceptance Policy;
2. Customer Identification Procedures;
3. Monitoring of Transactions; and
4. Risk management
Customer Acceptance Policy (CAP)
1. No account is opened in anonymous or fictitious/ benami name(s);
2. Parameters of risk perception are clearly defined in terms of the nature of business
activity, location of customer and his clients, mode of payments, volume of
turnover, social and financial status etc. to enable categorization of customers into
low, medium and high risk customers requiring very high level of monitoring, e.g.
Politically Exposed Persons may, if considered necessary, be categorised even
3. Documentation requirements and other information to be collected in respect of
different categories of customers depending on perceived risk and keeping in mind
the requirements of PML Act, 2002 and guidelines issued by Reserve Bank from
time to time;
i. Not to open an account or close an existing account where we are unable to
apply appropriate customer due diligence measures
ii. Circumstances in which a customer is permitted to act on behalf of another
person/entity, as in the case of power of attorney holders, should be clearly
spelt out in conformity with the established law and practice of banking.
iii. Necessary checks before opening a new account so as to ensure that the
identity of the customer does not match with any person with known
criminal background or with banned entities such as individual terrorists or
terrorist organizations etc.

The above can be met if we maintain a profile for each new customer based on risk
categorization that could be a part of initial documentation.
The nature and extent of due diligence will depend on the risk perceived. However, while
preparing customer profile branches should take care to seek only such information from

the customer which is relevant to the risk category and is not intrusive. The customer
profile will be a confidential document and details contained therein shall not be divulged
for cross selling or any other purposes.
For the purpose of risk categorisation, individuals (other than High Net Worth) and
entities whose identities and sources of wealth can be easily identified and transactions in
whose accounts by and large conform to the known profile as in the case of salaried
employees , may be categorised as low risk.
Customers who are likely to pose a higher than average risk may be categorized as
medium or high risk depending on customer's background, nature and location of
activity, sources of funds and his client profile etc. We need to apply enhanced due
diligence measures based on the risk assessment, thereby requiring intensive ‘due
diligence’ for higher risk customers, especially those for whom the sources of funds are
not clear.
In view of the risks involved in cash intensive businesses, accounts of bullion dealers
(including sub-dealers) and jewelers should also be categorized ‘high risk’ requiring
enhanced due diligence. We are also required to subject these ‘high risk accounts’ to
intensified transaction monitoring. High risk associated with such accounts should be
taken into account by branches to identify suspicious transactions for filing Suspicious
Transaction Reports (STRs) to FIU-ND.
Customer Identification Procedure (CIP)
Customer identification means identifying the customer and verifying his/ her identity by
using reliable, independent source documents, data or information. We need to obtain
sufficient information necessary to establish, to our satisfaction, the identity of each new
customer, whether regular or occasional, and the purpose of the intended nature of
For individuals, we should obtain sufficient identification data to verify the identity of the
customer, his address/location through the following:

a. Ration card
b. Passport
c. PAN card
d. Voter’s Identity Card
e. Driving license.
f. Telephone Bill ( for address proof)
g. Bank account statement (for address proof)
h. Aadhar Card (for address proof)

Officially Valid Documents that can be considered as both ID and Address Proof are (a)
Passport (b) Driving Licence (c) Voter's ID card (d) PAN Card and Aadhaar Card if the
name, address and photo of the customer is available in these documents .
For customers that are legal persons or entities wherever applicable, we should
(i) verify the legal status of the entity through proper and relevant documents;
(ii) verify that any person purporting to act on behalf of the entity is so authorized and
identify and verify the identity of that person;
(iii) Understand the ownership and control structure of the customer and determine
who are the natural persons who ultimately control the legal person.
(iv) Collect the PAN details and also verify details of the customer for a non-account
based customer, that is a walk-in customer, where the amount involved is equal to
or exceeds rupees Five Lakhs, whether conducted as a single transaction or
several transactions that appear to be connected.
(v) Periodic KYC updation shall be carried out at least once in every two years for
high risk customers, once in every eight years for medium risk customers and
once in every ten years for low risk customers
Monitoring of Transactions
1. Ongoing monitoring is an essential element of effective KYC procedures.
However, the extent of monitoring will depend on the risk sensitivity of the
account. We may prescribe threshold limits for a particular category of accounts,
as in the case of repledger and pay particular attention to the transactions which
exceed these limits.
2. Branches must maintain proper record of all cash transactions (deposits and
withdrawals) of Rs.10 lakh and above.
The internal monitoring system should have an inbuilt procedure for reporting of such
transactions and those of suspicious nature to controlling/ head office on a fortnightly
Risk Management
1. Risk categorisation shall be undertaken based on parameters such as customer’s
identity, social/financial status, nature of business activity, and information about
the clients’ business and their location etc. While considering customer’s identity,
the ability to confirm identity documents through online or other services offered
by issuing authorities may also be factored in.
2. The internal audit and compliance functions have an important role in evaluating
and ensuring adherence to the KYC policies and procedures. As a general rule, the
compliance function should provide an independent evaluation of the Company’s
own policies and procedures, including legal and regulatory requirements.

3. The audit machinery will be staffed adequately with individuals who are well-
versed in such policies and procedures.

4. Internal Auditors should specifically check and verify the application of KYC
procedures at the branches and comment on the lapses observed in this regard. The
compliance in this regard may be put up before the Audit Committee of the Board
on quarterly intervals.
We have an ongoing employee training programme to ensure that members of the staff
are adequately trained in KYC procedures.
Customer Education
Implementation of KYC procedures requires to demand certain information from
customers which may be of personal nature or which has hitherto never been called for.
There is a need to educate the customer of the objectives of the KYC programme. The
front desk staff needs to be specially trained to handle such situations while dealing with
KYC for the Existing Accounts
Where we are unable to apply appropriate KYC measures due to non-furnishing of
information and /or non-cooperation by the customer, we will be forced to consider
closing the account or terminating the business relationship after issuing due notice to the
customer explaining the reasons for taking such a decision. Such decisions need to be
taken at a reasonably senior level.
With a view to preventing branches being used, intentionally or unintentionally, by
criminal elements for money laundering or terrorist financing, whenever there is
suspicion of money laundering or terrorist financing or when other factors give rise to a
belief that the customer does not, in fact, pose a low risk, Branches should carry out full
scale customer due diligence (CDD) before opening an account. In case of need, branches
could approach their RMs and CO for further guidance.
Branches should not open an account (or should consider closing an existing account)
when it is unable to apply appropriate CDD measures. It is clarified that in the
circumstances when a branch believes that it would no longer be satisfied that it knows
the true identity of the account holder, the respective branch should notify CO for
necessary reporting.
In the event of an existing customer or the beneficial owner of an existing account,
subsequently becoming a PEP (Politically Exposed Person), branches should obtain CO
approval to continue the business relationship and subject the account to the CDD
measures as applicable to the customers of PEP category including enhanced monitoring
on an ongoing basis.
The instructions are also applicable to accounts where PEP is the ultimate beneficial

Appointment of Designated Director &Principal Officer
We have appointed the Managing Director as the Designated Director to ensure overall
compliance with the obligations imposed under PML Act and the Rules and the Chief
Audit Manager as Principal Officer who shall be responsible for monitoring and
reporting of all transactions and sharing of information as required under the law. He
will maintain close liaison with enforcement agencies, banks and any other institution
which are involved in the fight against money laundering and combating financing of



The Fair Practices Code (FPC) has been devised by Muthoottu Mini Financiers Ltd
(Company) in response to the guidelines issued by Reserve Bank of India vide circular
DNBS.CC.PD.No226/03.10.01/2011-12 dated 26 March 2012 titled “Guidelines on Fair
Practices Code for NBFCs”.

The FPC will be applicable to all offices of the Company including the Head Office,
Corporate Office, Zonal Offices, Regional Offices and Branches. This Fair Practices Code is
aimed to provide to all the stake holders, especially customers effective overview of
practices followed by the Company in respect of financial facilities and services offered by
the Company to its Customers and aims to enable customers to take informed decisions in
respect of the facilities and services offered by the Company.

II. Objectives
This Code has been drawn up to:
a) Provide to the customers effective overview of practices followed by the Company in
respect of financial facilities and services offered by the Company to its Customers;
b) Enable customers to take informed decision about the financial facilities and services
offered by the Company;
c) Promote good, fair, transparent and trustworthy practices by setting minimum standards in
dealings with customers;
d) Enable customers to have better understanding of what they can reasonably expect of the
services offered by the Company;
e) Reckon with market forces, through competition and strive to achieve higher operating
f) Foster fair and cordial relationship between the customers and the Company.

III. Key commitments
a) Act fairly and reasonably in all our dealings with you
b) Meet the commitments and standards in this code for the products and services we offer
c) Make sure that our loan products and services meet relevant laws and regulations
d) Ensure that our dealings with you will rest on ethical principles of integrity and

IV. Applications for loans and their processing
a) An application in the vernacular language will be available in the branches and shall be
signed by the borrower along with the Gold which he proposes to pledge against Loan.
b) If any additional documents or information are required from the customer, same shall be
communicated to the customer immediately.
c) Company will issue a Sanction letter to the borrower containing details about the loan
sanctioned, jewellery pledged and applicable interest rates.
d) The Borrower has to sign and submit a Demand Promissory to the Company. The terms
and conditions of the loan is mentioned in vernacular language on each Sanction letter and
the same shall be accepted by the borrower before disbursement of the loan.
e) Changes in terms and conditions of the loan;
a. All changes in interest rates, services and other charges shall only be prospective in
nature b. Company shall give notice to the borrower of any changes in terms and conditions
before these are affected including the rate of interest.
f) Every borrower is entitled to receive back the securities offered for the loan availed.
However, where the borrower has any other liability with the Company, the Company
reserves the right to not to release the securities. A lien of the above order will be exercised
only after giving due notice to the borrower.
V. The interest rates on gold loans will be fixed by the company on the basis of the following
internal valuations.
a) The company lends varying amounts per gram of the gold (LTV) depending upon the
market value as detailed by RBI direction and the purity of the gold. As per the risk
assessment of the Company a higher LTV is a riskier than a lower LTV. Accordingly, lower
LTV attracts lower rate of interest and higher LTV attracts higher interest rate. Similarly,
interest rates varies with the period of loan ie the rate of interest progressively goes up with
the increase in the period of loan.
b) Cost of funds: Interest on loans will be levied as a markup on the current cost of funds.
The current cost of funds for this purpose means the incremental cost of borrowings of the
company and its operating cost.
c) The interest rates charged by the Company shall always be expressed in compound
interest rates with monthly rests. The annualized interests will also be given in the
d) If penal interest is to be levied for late payment it shall be mentioned in the loan
e) The current interest rates of different gold loan schemes of the Company is appended as

Annexure. VI. Marketing and promotions
a) The Company shall not deliberately provide any product contrary to the need or
expectation of the customer

b) Company shall not market or advertise any product with hidden charges, if any. Full and
updated information regarding loan schemes, loan per gram charges etc will be displayed in
the websites of the Company and also will be displayed in the branches.
c) Complete or select information will also be made available through various media
channels, posters, brochers, notices, displays etc based on the decision of the management
of the Company from time to time.

VII. Policy on KYC, Appraisal, Insurance, Storage of Securities, Auction etc.
The Company shall put in place a policy duly approved by the Board of Directors covering
the following aspects:
a) Adequate steps to ensure that the KYC guidelines stipulated by RBI are complied with
and to ensure that adequate due diligence is carried out on the customer before extending
any loan.
b) Proper appraisal procedure for jewellery accepted as collateral security.
c) Declaration shall be obtained from the borrower confirming ownership of gold jewellery.
d) All branches shall have proper storage facility of either Strong Rooms or Safes
conforming to ISI Standards of approved make to store the jewellery in safe custody. The
keys to the strong room/safe shall be held separately by more than one officials and the
operations thereof shall be done jointly. The staff shall be imparted training on a continuous
basis to ensure that the guidelines covering security issues are strictly adhered to. The gold
items shall be periodically inspected by the internal auditors to ensure quality, quantity and
proper storage
e) The jewellery accepted as collateral security shall be appropriately insured. The auction
procedure in case of non – repayment shall be transparent. Prior notice to the borrower shall
be given before the auction and there shall not be any conflict of interest. The auction
process shall ensure that an arms length relationship in all transactions during the auction is
maintained including with group companies and related entities. The details regarding
procedure for auction shall be disclosed in the loan document for availing the loan. The
auction will be only through auctioneers approved by the Board and the Company shall not
participate in the auction. The auction shall be announced to the public by issuing
advertisements in at least two newspapers, one in vernacular language and the other in a
national daily newspaper.
f) Any fraud in the functioning of the Company shall be enquired into by the appropriate
authority and suitable punitive measure shall be taken by the appropriate disciplinary
authority. Any review of the decision of the disciplinary authority shall be carried out by the

1) Muthoottu Mini Financiers Ltd shall refrain from interference in the affairs of the borrower
except for the purpose of loan provided in the terms and conditions of the agreement unless
a new information not earlier disclosed by the borrower has come to the notice of the

2) All gold loans will be sanctioned on the basis of a preliminary assaying of the purity of the
pledged ornaments. These will be verified later on by qualified/ experienced gold assayers
appointed by the company and in case the purity of the pledged ornaments are below the
minimum accepted level of purity approved by the company or purity as assessed at the time
of pledge, the company reserves the right to recall such loans without delay or notice
3) Since gold loans are sanctioned instantaneously, no acknowledgment of loan application
will be given
4) The company does not resort to undue harassment or unlawfull coercion methods for
recovery of loans granted by the company
5) All loans are sanctioned at the sole discretion of the company

The customer grievance with regard to the loans sanctioned by the company shall be dealt
with as follows;

1) All customer grievances will be taken up with the Regional Manager for redressal
2) Any grievance that cannot be solved by Regional Manager can be taken up with Chief
Operating Officer at Corporate Office Kochi who has been appointed as the Grievance
Redressal Officer of the Company



1. Preface
This paper has been drawn by way of consolidation, updation and additions to our existing
lending norms with a view to present a comprehensive policy document for favour of the
Board’s approval. The policy seeks to maintain consistent improvement in asset quality,
improvement in net interest margins and operational efficiency particularly in the areas of
compliances and risk management.
2. Regulatory regime
As a Non Banking Financial services company registered under the Reserve Bank of India Act ,
our lending policy is guided by the directives and guidelines issued by The Reserve Bank of
India from time to time . As such, this policy document is subject to review based on periodic
changes in regulatory norms.

1. Single / Group Exposure norms - Lending to any single borrower will not exceed 15% of
owned funds and to any single group of borrowers not to exceed 25% of owned funds.
2. Maintain a Capital to risk weighted asset ratio of 15%.
3. Prudential lending norms - Asset classification, provisioning requirements as per RBI
Prudential norms.
4. Fixation of maximum loan per gram based on the Loan to Value (LTV) guidelines of RBI
5. Compliance with Anti money laundering / countering financing of Terrorist Activities as
elucidated in our Anti Money Laundering (AML) policy.

3. Risk management
We have a zero tolerance policy on risk. The different tiers of control already implemented,
begins at the branch level. Regional Managers, Audit Managers, Operational Managers and
Vigilance Managers have a clear job role to enforce routine check on enforcement of quality
assurance measures. CO functionaries will also undertake random check on related issues,
whenever they visit the branches.
The Risk Management Committee, of the Board, is entrusted with the task of identification,
measurement, monitoring and mitigation of the risk factors on an ongoing basis.

As a part of our ongoing risk mitigant initiatives, the Company has implemented rating matrix
system to assess vulnerability at branch as well as at corporate office levels. This rating exercise
will be a part of periodic audits.
Notwithstanding, given the short term nature of our Loan assets cushioned well by net interest
margins, the secured nature of business, vulnerability to credit, operational as well as market
risks is limited.

4. Resources
Our funding needs are presently sourced out of debentures and also partly through working
capital facilities from Banks. Reckoning our ambitious growth plans, steps have been initiated to
source additional banking facilities, in addition to periodical issue of non-convertible debentures.
As a part of our initiative to raise cheaper source of funds and also to draw parity with our assets
maturity profile, alternative short term sources of funding would also be added to the resources.

5. Loan Pricing policy
The interest rates on gold loans will be fixed by the company on the basis of the following
internal valuations.
1. The company lends varying amounts per gram of the gold (LTV) depending upon the
market value and the purity of the gold. As per the risk assessment of the company a
higher LTV is riskier than a lower LTV. Accordingly, lower LTV attracts lower rate of
interest and higher LTV attracts higher interest rate. Further, in case of schemes where
the interest rate varies with tenor of the loan, the borrower can remit the monthly interest
alone and continue to enjoy the loan at lower interest rate.
2. In terms of RBI guidelines, maximum LTVrate that can be fixed should not exceed 30-
day average of the closing rate for standard gold (22k) fixed by India Bullion and
Jewellery Association.
3. No allowance has been provided for add-ons such as making charge, sales tax, etc.
4. The maximum permissible LTV (Loan-to-Value) of the pledged ornaments will,
however, be within the ceilings stipulated by RBI from time-to-time (The maximum
permissible LTV is 75% at present).
5. Cost of funds: Interest on loans will be levied as a mark up on the current cost of funds.
The current cost of funds for this purpose means the incremental cost of borrowings of the company, its operating cost, loan loss provision and taking into account the operating
margins required for growth of the Company.
6. The interest rates charged by the Company shall be expressed in compound rates with
monthly rests.

6. Products
The Company’s assets are advances granted against the security of gold. Therefore the products
profiles are reviewed regularly with a view to customize products in line with market
expectations, availability of funds and competitor analysis. Variants of loan products through
different schemes within the policy framework are done after periodic review of market
conditions, duly approved by the board.
Gold loan schemes of the company are extended for a period upto 12 months from the date of
initial sanction .
The existing Gold loan products are described below:-
Smart Loan
i) Customers are always looking for interest rates and value for their gold to get
maximum loan amount to meet the financial requirement. Smart Loan will meet the
financial requirement, if the customer want to avail loans with higher rate per gram.
The scheme is designed for those customers who have the habit of paying interest
ii) Easy Loan
Easy Loan will meet the immediate financial requirement, if the customer want to
avail loans at lower rate of interests. If the customer have the habit of paying interest
monthly, this scheme will be suitable.
iii) Quick Loan
Quick Loan is the best financial solution, if the customer want to avail loans at lower
rate of interests. Speedy disbursal of the loan will be ensured without waiting too
much in the Branch.
iv) Mahila Loan
Through Mahila Loan we help to empower women customers by providing timely
credit which will satisfy thier immediate requirement without waiting too much. Selfhelp groups, women engaged in making handicrafts, tailoring, vegetable dealers, women drivers and all other working women in the country are eligible for this
specialised product. Muthoottu Mini Mahila Loan is a solution which will speed up
theier efforts to support their family. We are also inclined towards giving additional
benefits of interest to women.

v) Aaswas Loan
Aaswas Loan will meet the immediate requirement of the customers who want to
avail loans at lower rate of interests for a shorter period. This product is available in
all Branches of Muthoottu Mini.
vi) Premier Loan
Premier Loan is best suited if the customer require higher loan amount with lower
rate of interest. Traders, business people, people engaged in constructions and all
those people who require higher loan amount with enough gold jewels in your hands
are eligible for this product.
vii) EMI Loans
An EMI scheme where the borrowers have the option to borrow money at lump sum
and pay back on a monthly basis by pledging your gold ornaments. Maximum
repayment period under this scheme is 12 months from the date of loan.
viii) Daily Collection Schemes
A scheme which attracts the traders and daily income segments of the society.
Customers can repay the loan in daily instalment. The borrower can close the loan by
remitting daily instalments in 99 days. This loan product is available in selected
branches of Muthoottu Mini.
ix) Online Gold Loan
Our Online Gold Loan integrate the technology and our efficiency to bring the
customer convenience as never before. Customers can avail gold loan from any
x) MM PrePay
Muthoottu Mini have come with a solution to maximize the customer satisfaction.
MM Pre Pay is a solution to meet the financial requirements of the people by paying
the interest in advance without the burden of accumulating interest by the end of the
loan period.

xi) 90 paisa Scheme
90 paisa scheme is one of the lowest interest scheme presently available in Muthoottu
Mini. This gives customers more money to spend by reducing their interest burden,
which can create a ripple effect of increased spending throughout their life.
xii) Loan Against Property
Loan Against Property is given against equitable mortgage of property. Maximum Loan granted
will be 3 crores with maximum tenure at 36 months.This loan is given at a fixed rate of Interest
of 22.81%. The Board of Directors will sanction each loan on case to case basis after considering
the valuation report on the property and legal opinion on the property documents.
xiii) Microfinance Loans
Microfinance loans are loans given to Female clients for Income Generating Activities on the
basis of joint liability. Loans are repayable in equated instalments over a period of time.
Loans are given for declared legal end use, like business expansion, working capital needs,
purchasing raw material, purchasing animals, Marriage, education, debt consolidation etc.
Clients are organized in center consist of 5-25 females divided in to sub groups and each woman
takes joint liability for the other members of the group. The clients have weekly meetings where
they pay back the loans to the field officers called Relationship officers of the company. All
process and procedures are formulated based on RBI’s NBFC – MFI guidelines and MACC
issued by SRO -MFIN issued from time to time.
Microfinance Loan Policy is as per Annexure-1

7. Purpose
While we are not required to ascertain the purpose of the loan, since KYC requirements are met,
it will be essential to confirm that the funds raised out of our gold loans are not to finance
terrorist activities and or for money laundering purposes.

8. Quantum of advance and discretionary limits
While no minimum loan level is prescribed, company has stipulated that the minimum quantum
of gold ornaments that can be ledged at one time will be two grams of gold content.
Maximum loan - no maximum cap, though individual loans of Rs 5,00,000/- and above should
bear the respective RM’s prior approval. RMs can approve loans to individual borrowers upto
RS 25,00,000/- (Twenty five lakhs only) subject to strict compliance with quality as well as rate
per gram criteria (LTV). In such cases RMs should reconfirm that KYC norms have been fully
complied with .
Loans to individuals above the value of Rs 25 lakhs should bear Regional Head’s prior approval

Loans above value of Rs. 50 Lakhs will be approved by the operations Head at the Corporate
office of the Company with recommendation of the Regional Head.
While approving loans compliance with ceiling linked to our net owned funds, fixed by RBI, will
have to be ensured.
9. Repledger Loans
The Company has decided to stop giving gold loan to repledgers. Branches are prohibited from
extending loans to repledgers.
Maximum loan amount is restricted to 75% of market value on the date of advance. Rate per
gram in all cases will be as per CO guidelines issued from time to time. Branches do not have the
discretion to offer different per gram rates than the one circulated. Company has decided to
adhere to the maximum rate per gram LTV computed on the basis of monthly average rate of 22
carat gold published by India Bullion and Jewellers Association( IBJA).
11.Verification of Ownership of Gold
Where the gold jewellery pledged by a borrower at any one time or cumulatively on loan
outstanding is more than 20 grams, branch shall keep a record of the verification of the
ownership of the jewellery. The ownership verification need not necessarily be through original
receipts for the jewellery pledged but a suitable document shall be prepared to explain how the
ownership of the jewellery has been determined, particularly in each and every case where the
gold jewellery pledged by a borrower at any one time or cumulatively on loan outstanding is
more than 20 grams.
12. Standardisation of Value of Gold
The gold jewellery accepted as collateral by the company shall be valued by the following
a) The gold jewellery accepted as collateral by the Company shall be valued by taking into
account the preceding 30 days’ average of the closing price of 22 carat gold as per the
rate as quoted by the India Bullion and Jewellers Association( IBJA).
b) If the purity of the gold is less than 22 carats, the Corporate Office shall translate the
collateral into 22 carat and state the exact grams of the collateral. In other words,
jewellery of lower purity of gold shall be valued proportionately subject to the condition
that the purity of the ornaments is not below 19 carats.

c) Company, while accepting gold as collateral, should certify that they have assayed the
gold and state the purity (in terms of carats) and the weight (gross and net weights) of the
gold pledged with suitable caveats to protect themselves against disputes during
redemption. The certified purity shall be applied both for determining the maximum
permissible loan and the reserve price for auction
13.General Conditions
1. Muthoottu Mini Financiers Ltd refrains from interference in the affairs of the borrower
except for the purpose of loan provided in the terms and conditions of the agreement unless a
new information not earlier disclosed by the borrower has come to the notice of the company.
2. All gold loans will be sanctioned on the basis of a preliminary assaying of the purity of the
pledged ornaments. These will be verified later on by qualified/ experienced gold assayers
appointed by the company and in case the purity of the pledged ornaments are below the
minimum accepted level of purity approved by the company, the company reserves the right
to recall such loans without delay or notice.
3. Since gold loans are sanctioned instantaneously, no acknowledgment of loan application will
be given.
4. The company does not resort to use muscle power or unlawful coercion methods for recovery
of loans granted by the company.
5. All loans are sanctioned at the sole discretion of the company
6. The pledged ornaments will be stored in pucca strong rooms and will be duly insured against
theft, dacoity, etc.
14.Way forward
We realize the need to constantly review and upgrade lending policy to review the products
profile as well as terms to be able to be competitive in the market.
With our vision to become a preferred service provider in the financial services segment and to
migrate to become a financial supermarket, product innovation, customization, addition and
modification will remain a continuing process.

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Products & Services

Gold Loan

A quick Loan against your Gold. Muthoottu Mini’s Cornerstone Service


Loans for backing women entrepreneurial activity based on guarantee in the Joint Liability Group


Life Insurance, Health Insurance, General Insurance

Money Transfer

International money transfers and domestic money transfers are a quick and easy way of transferring personal remittances.

Travel & Tours

Flight tickets and International Tour packages