Notice To General Public And Customers

Avanti Finance Private Limited wishes to draw the attention of our customers and members of the general public to the prevalence of fraudulent activities being perpetuated by fraudsters and unscrupulous people who aim to deceive the general public by using the name of Banks, NBFCs and other financial institutions.

This type of fraud may be via email, letters, text messages, facsimile or by using a website, email ids purporting to be that of Avanti. In the event of receiving any communication, We strongly cautions the public against providing personal information, sending money or disclosing bank details over email, SMS messages etc. to any person claiming to represent Avanti or to have a relationship with Avanti.

Please note that Avanti does not charge or take any advance amounts, and does not accept loan applications via email, SMS etc. Accordingly, our customers and general public are strongly advised to seek information/clarifications by contacting our business office directly and/or online through https://avantifinance.in/ or call us directly on 1800 309 5021, in the event you receive any such communication.

All official emails from Avanti or its representatives contain the domain name @avantifinance.in and do not contain any other domain name in any other form (like gmail, yahoo etc).

Our Principal Address for Correspondence is:
Registered Address:
# 2727, 2nd floor, 1st Main Road, HAL 3rd Stage, Ward no. 58 (Old No. 83) New Thippasandra, Bangalore, Bangalore North, Karnataka, India, 560075
CIN for AFPL: U65929KA2016PTC138355
CIN for AMPL: U65929KA2016PTC138292

Members of the public are hereby advised not to send/receive money to/from such scammers, as Avanti will have NO LIABILITY whatsoever for any and all losses/damages suffered by anyone who falls victim to such scams/letters from fraudsters. We hereby disclaim all such correspondence and messages and warn our customers and the general public to disregard such and to exercise extreme caution at all times.

Members of the general public and our customers are also advised to immediately report any suspicious incident and/or incident of defrauding of money as a result of these fraudulent acts and practices to the authorities in their jurisdiction, i.e. the Police and the Telecommunications regulator, including the Cyber Crime Cell. These incidents can also be referred to Avanti for appropriate action at our end.

It is our constant endeavour to provide the best and unparalleled support to our customers.

Customer Service Policy

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1. Introduction

1. Avanti Finance Private Limited (hereinafter referred to as ‘the Company’) has framed the Customer Service Policy (hereafter referred to as “Customer Service Policy” or “the Policy”) in accordance with the regulatory requirements specified by the Reserve Bank of India (RBI).
2. In pursuit of our mission to make financial services accessible and affordable in a timely manner to the un/underserved households, we constantly endeavour to deliver quality services to our users.
3. As a financial inclusion platform, providing quality customer service and ensuring customer satisfaction are of prime importance to Avanti. This Policy document aims at minimizing instances of customer complaint and grievances through proper service delivery, a robust review mechanism and prompt redressal of any customer complaint grievances that still may arise.

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2. Objectives of the Policy

The objective of the Customer Service Policy is to ensure all customers are treated fairly and without bias; issues raised by customers are attended and dealt with utmost care and resolved within a reasonable time; customers are made aware of their rights and alternative remedies if they are not satisfied with the response or resolution to their complaint.

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3. Categories of Customer’s Communications

1. Query - General inquiries, primarily relating to loans, interest rates, repayment terms, eligibility norms, categories of loans, eligibility criteria, terms of financing / refinancing etc;‍
2. Request – Requests for obtaining any valid services including financing or refinancing support by the customers directly;‍
3. Grievance – A communication by prospective / existing customers that expresses dissatisfaction because of lack of action, inadequate quality of services;‍
4. Complaint – Related to staff misbehaviour, cheating / fraud, false commitments, misconduct with the customers; and‍
5. Suggestion / Feedback – Suggestions / feedback with respect to its operations, policies or practices.

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4. Mechanism for Grievance

• 1. The customer grievance redressal policy shall adhere to the following principles:
  2. Customers shall be treated fairly at all times. Complaints raised by customers shall be dealt with courtesy and on time. Customers shall be fully informed of avenues to escalate their complaints/ grievances to the organization and their rights to alternative remedy, if they are not fully satisfied with the response of Avanti to their complaints.
  3. The Company shall also deal with the issues related to services provided by the outsourced agencies.
  4. Customer can lodge his / her grievance through any of the following channels:
• I. Walk-in at Branch
  1. Each Partner Branch has a complaints register. Any customer is free to walk into the branch and register a complaint in the complaint register.
  2. The Partner will immediately scan the details of the complaints and share it with Avanti along with their inputs on the complaint. Avanti employees or the officer of field monitoring partner team visiting the Partner branch must check the complaints register for any open complaint.
  3. In case of any pending complaints or any discrepancy noted in the registering or closing the complaint(s) the visiting Avanti officer or officer of partner monitoring team should escalate the same to the Partnership team at Avanti Head office.
• II. Remotely
  1. Customers can submit their Complaints through post to the below address by giving full disclosures and details of the complaint and giving specific instances of the cause of complaint:
•          ⇒ Address: Avanti Finance Private Limited, #2727, 2nd Floor, 1st Main Road, HAL 3rd Stage, Ward No. 58 (Old No. 83), New Thippasandra, Bangalore, Bangalore North, Karnataka, India, 560075
• • 1. Customers can also submit their grievances through email at customerservice@avantifinance.in by giving full disclosures and details of the complaint and giving specific instances of the cause of complaint.
    2. Customers can also lodge their complaints and grievance by calling the customer Service contact of Avanti on the toll-free number 1800 309 5021. The timings of Customer Service Contact shall be made available in the branch display.
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5. Recording and tracking of Complaints

All the complaints received is recorded and tracked for end-to-end resolution in a spreadsheet format. Complaint MIS is published and shared to the management on quarterly basis for review and feedback.

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6. Resolution of Complaints

1. Any complaint through e-mail / letters / walk-in or any other mode shall be acknowledged promptly after receipt, at the Head Office or Partner Branch Offices as and when received;
2. The Complaints shall be registered in the Customer Grievance Register (CGR) maintained electronically and / or physically, and shall include full details of the complainant (name, address and contact details), date of receipt, fact of the complaint, category of complaint etc;
3. The company has appointed Mr. Edwin Samuel (edwin.samuel@avantifinance.in) as its authorized Grievance Redressal Officer (‘GRO’). The GRO will take steps to redress the grievances with care and diligence, normally within the period of 21 working days from the date of receipt of the complaints;

1. If the complainant is not satisfied with the reply / action / resolution given by Grievance Redressal Officer (GRO), the complainant can approach other escalation levels such as -

        ⇒ RBI: Reserve Bank of India: If the complaints/ disputes are not redressed within a period of one month, the customer may appeal to the Officer in Charge of Regional Office of DNBS of RBI. Complete contact details are as below:

         ⇒ The Reserve Bank of India (RBI), Department of Non-Banking Supervision St. Martha's Hospital, 10/3/8, Nrupathunga Rd, Opp St, Nunegundlapalli, Ambedkar Veedhi, Bengaluru, Karnataka 560001;

1. The Company will acknowledge the receipt of the complaint and will generate a complaint reference number and will ensure that a resolution is provided within prescribed turnaround time (TAT) of 21 working days, not exceeding a period of 30 days across all levels. In the unlikely event of a customer not receiving a response within one month from the date of lodgement of the initial complaint, he/she may approach the NBFC Ombudsman;
2. The details of the NBFC Ombudsman are available as below and also in the Company’s website:

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The final communication sent to the customer regarding redressal of the complaint shall mention about the option to the customer to approach the concerned RBI Ombudsman in case he/she is not satisfied with the redressal of the complaint.

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7. Tracking and Reporting

1. All complaints will be registered in a central complaints management system of the Company. Complaints will be assigned a unique reference number which will be communicated to the complainant along with an appropriate turnaround time;
2. In case the resolution needs additional time, an interim response shall be sent to the complainant;
3. All complaints shall be monitored at appropriate levels and marked as closed only after resolution of the customer grievance and due communication to customer; and
4. Reports on complaints received and status will be presented to the Board on a quarterly basis.

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8. Sensitizing Avanti and Partner employees on handling complaints

1. The Company shall impart training on an ongoing basis to all employees on handling complaints/ redressal of grievances/customer counselling; and

1. The Principal Nodal Officer of the Company shall ensure that internal mechanism for handling complaints/ grievances operates smoothly and efficiently at all levels.

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9. Recovery Process

1. The staff shall be trained in proper etiquette for recovery process as elaborated in the Fair Practice Code adopted by the Company.

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10. Policy Review and Updates

The implementation of this Policy shall be monitored and reviewed periodically by the Board of the Company.

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11. Time Frame

1. The Complaints received will be analyzed from all possible angles. All efforts will be made to resolve each complaint received generally within the stipulated time as per the following escalation matrix:
2. Customer Service Contact (CSC) or Partner engagement manager will address the complaint within 7 working days of receipt of the complaint;
3. Grievance Redressal Officer (GRO) will address the complaint within 21 working days of receipt of the complaint; and
4. There may be some complaints which require deeper analysis from all possible angles which may cause delayed resolution of the complaint. In such cases, the company will try to resolve the grievances at the earliest depending on the nature of the case. Such delay in addressing the complaint beyond the prescribed time limit shall be conveyed to the complainant along with reasons for the same.

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12. Reporting to Board of Directors

Summary of the customer grievance reports along with actions initiated would be reported to the Board at least once in a year. The report shall contain information like, the total no. of complaints received, Status of complaints such as closed and open and reason for open complaints thereof, which will be placed before the Board for information / guidance.

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13. Regulatory References

1. This policy is framed as per the following regulatory references and in accordance with leading industry practice: Master Direction – Reserve Bank of India (Non-Banking Financial Company –Scale Based Regulation) Directions, 2023
2. Review of the Policy: This Policy shall be reviewed annually.

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14. Display format at Branches

1. For any queries, feedback and grievances, clients may please feel free to contact the Customer Support Service at Toll Free Contact Number 08041689310 between 9.30 to 6 pm on Monday to Friday except on holidays.

The customer feels that He/ She is not getting resolution from the company’s officials, she can also contact the MFI industry Association / SRO – MFIN and Sa-Dhan. If the complaints/ disputes are not redressed within a period of one month, the borrower may appeal to the Officer in Charge of Regional Office of DNBS of RBI.

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• Avanti Finance Private Limited  

Interest Rate Policy

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Whistle Blower Policy

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1. Introduction

Avanti Finance Private Limited (hereinafter referred to as ‘the Company’) strongly believes in conducting all affairs of its constituents in a fair and transparent manner by adopting the highest standards of honesty, inclusiveness, professionalism, integrity and ethical behaviour.

The whistle blower policy (hereinafter referred to as “Whistle Blower Policy” or “Policy”) has been formulated as part of corporate governance norms and transparency where the employees, customers or stakeholders are encouraged to refer any complaints which have not been resolved or satisfactorily resolved within the usual applicable protocols. The employees may refer any complaints covering areas such as corruption, misuse of office, criminal offences, suspected / actual fraud, failure to comply with existing rules and regulations, conflicts of interest, related party transactions and acts resulting in financial loss/ operational risk, loss of reputation, etc.

This Policy shall provide a channel to the employees (including directors) and other stakeholders to report to the management or the board about unethical behaviour, actual or suspected fraud or violation of the Code of Business ethics or legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports and such other matters.

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2. Objectives of the Policy

The key objectives of the Policy are as under:

1. Promote a culture of speaking up / raising red flags on matters relating to breaches/ violations of the Company’s Code of Business ethics or fraudulent transactions.

2. Provide a platform and mechanism for the employees and relevant stakeholders to voice genuine concerns of grievances about unprofessional conduct without the fear of reprisal to the employee raising the concern.

3. Provide a non-threatening environment to employees to discuss matters relating to the Code of Business ethics.

4. Adhere to the highest standards of ethical, moral and legal conduct of business operations.

5. Promote clean business transactions, professionalism, productivity, promptness and transparent practices and ensures putting in place systems and procedures to curb opportunities for corruption.

6. Sustain, strengthen and encourage a culture of integrity & compliance.

7. Institutionalize a mechanism for protection of employees from reprisals or victimization, for whistle blowing in good faith as the Company strictly follows No Retaliation Policy.

8. Provide an assurance to external stakeholders that there is internal cordiality and transparency.

9. Treat the violations / breaches  / non-compliance at various levels of the Company with vigour and due care and accordingly realign processes and take corrective actions as part of its corporate governance.

The Policy shall help the Company to create an environment where employees and relevant stakeholders feel free and secure to raise the alarm where they see a problem. It shall also ensure that whistleblowers are protected from retribution, whether within or outside the Company.

3. Applicability of the Policy

The Policy applies to all the Company’s employees. The Policy shall also apply to any complaints made by other stakeholders of the Company such as outsourced agents, customers and members of public.

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4. Governance Structure

The Company has devised an effective whistle blower mechanism enabling stakeholders, including individual employees to freely communicate their concerns about illegal or unethical practices.

4.1 Nominated Director

A Director nominated by the Company’s Board of Directors (or the Audit Committee when legally required to be setup) will review the effectiveness of the vigil mechanism and implementation of the Whistle Blower Policy to provide adequate safeguards against victimization of employees and relevant stakeholders. The details of establishment of vigil mechanism shall be disclosed by the Company on the website, if any, and in the Board’s Report to the stakeholders.

In case of repeated frivolous complaints being filed by a director or an employee, the Audit Committee (when it is formed) or a director to be nominated by the Board (As required under Section 177 of the Companies Act, 2013 read along with Rule 7 of The Companies (Meetings of Board and its Powers) Rules, 2014) shall take suitable action against the concerned director or employee.

4.2 Whistle blowers Committee

The Whistleblower committee (“Whistleblower Committee” / “Committee”) shall comprise of Mr. Rahul Gupta, Mr. Manish Thakkar and Mr. Sunil Kumar Tadepalli and the Quorum of the meeting of the committee shall be 1/3rd of the total members of the committee or 2 members of the committee whichever is higher such that the attendance of the Nominated officer will be mandatory for the meeting.

The Committee shall meet when any complaint is referred by the nominated officer Mr. Rahul Gupta or on a suo moto basis at the discretion of the members of the Committee. The Committee shall institute further investigation / call for additional documentary evidence before submitting its findings on the matter.

The findings of the Whistle Blower Committee shall be suggested to the nominated Director for his / her decision (or the Audit Committee when required to be setup).

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5. Scope

This Policy intends to cover serious complaints that could have grave impact on the operations and performance of the business of the Company. Receipt of information about corruption, malpractice or misconduct on the part of employees, from whatever source, would be termed as a complaint. Complaints may be received from any of the following sources:

1. Complaints received from employees of the organisation or from the public
2. Departmental inspection reports
3. Scrutiny of transactions reported under the Code of Business ethics
4. Reports of irregularities in accounts detected in the routine audit of accounts, e.g. tampering with records, over-payments, misappropriation of money or materials, etc.
5. Audit reports of the accounts of the Company
6. Complaints and allegations appearing in the press, etc.
7. Source information, if received verbally from an identifiable source, to be reduced in writing.
8. Intelligence gathered by agencies like CBI, local bodies etc.

Under the Policy, employees and relevant stakeholders of the Company having sufficient grounds for a concern can lodge complaints.

The Policy intends to cover the following types of complaints:

1. Fraudulent activities or activities in which there is suspected fraud
2. Intentional or deliberate non-compliance with laws, regulations and policies
3. Questionable accounting practices including misappropriation of monies
4. Illegal activities
5. Corruption and deception
6. Misuse/ Abuse of authority
7. Violation of the Company’s rules, manipulations and negligence
8. Breach of contract
9. Pilferation of confidential/proprietary information
10. Deliberate violation of law/regulation
11. Wastage/misappropriation of Company’s funds/assets
12. Malpractices/ events) causing danger to public health and safety.

The following nature of complaints shall not be covered in the Policy:

1. Complaints that are frivolous in nature, i.e., without merit or reasonable basis including complaints with mala fide, malicious and/or ulterior motive.
2. Issues relating to personal grievance (increment, promotion, etc.), if not resolved by the mechanism (including Human Resources Department of the Company) in accordance with the Company’s Code of Conduct.

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6. Guiding Principles

To ensure that this Policy is adhered to, and to assure that the concerns raised under this Policy 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
2. Ensure complete confidentiality of the identity of the Whistle Blower
3. Not attempt to conceal evidence of the Protected Disclosure
4. Take disciplinary action, if anyone destroys or conceals evidence of the Protected Disclosure made/to be made
5. Provide an opportunity of being heard to the persons involved, especially to the Subject
6. Provide protection to Whistle Blower under this Policy provided that Protected Disclosure is made in good faith, the Whistle Blower has reasonable information or documents in support thereof and not for personal gain or animosity against the Subject
7. Take disciplinary action for event covered under this Policy or upon victimizing Whistle Blower or any person processing the Protected Disclosure.
8. Ensure that any other Director/ Employee or other stakeholders assisting in the said investigation or furnishing evidence, is protected to the same extent as the Whistle Blower.

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7. Procedure

7.1 Lodging of Complaints

The Protected Disclosure shall be submitted in a closed and secured envelope and shall be super scribed as “Protected disclosure under the Whistle Blower policy”. Alternatively, the same can also be sent through email or any other acceptable mode of communication with the subject “Protected disclosure under the Whistle Blower policy” to a functional email id of the Company who’s access is only with the Whistle Blower Committee. If the complaint is not super scribed and closed as mentioned above, it will not be possible for the Board to protect the Complainant and the protected disclosure will be dealt with as if a normal disclosure.

In order to protect identity of the Complainant, the nominated officer (or designated equivalent officer) will not issue any acknowledgement to the Complainants and they are advised neither to write their name/address on the envelope nor enter into any further correspondence with the nominated officer. The nominated officer shall assure that in case any further clarification is required he will get in touch with the Complainant.

Concerns expressed anonymously are much less persuasive and may hinder investigation as it is more difficult to look into the matter or to ensure protection of the Whistle Blower. Accordingly, Company will consider and investigate anonymous reports, but any concerns expressed or information provided anonymously would be investigated on the basis of the individual merit of each circumstance.

To ensure the anonymity of the Complainant, Company shall ensure that it shall not make any attempt to require the anonymous Complainant to reveal his/her identity, or carry any internal investigation with the sole purpose of tracking the anonymous Complainant.

Anonymous Complainant shall ensure that it submits enough data, details, documents, evidence to substantiate the violation.

The Protected Disclosure shall be forwarded under a covering letter signed by the Complainant. The nominated officer shall detach the covering letter bearing the identity of the Whistle Blower and process only the Protected Disclosure.

All Protected Disclosures shall be addressed to the nominated officer or Director of the Company or to the Audit Committee (when the committee is required to be legally setup).

The Protected Disclosures shall be addressed to the following address: The Nominated officer OR the nominated Director –

Avanti Finance Private Limited

#2727, 2nd Floor,

1st Main Road, HAL 3rd Stage,

Ward No. 58 (Old No. 83),

New Thippasandra, Bangalore,

Bangalore North, Karnataka, India, 560075

E-mail: whistleblower@avantifinance.in

7.2 Receipt of Complaint

On receipt of the Protected Disclosure, the nominated officer shall maintain and preserve records of the Protected Disclosure and also ascertain from the Complainant whether he / she was the person who made the Protected Disclosure or not. The record will include:

1. Brief facts
2. whether the same Protected Disclosure was raised previously on the same Subject and if so, the outcome thereof
3. Details of actions taken by the nominated officer (or equivalent department) or CEO for processing the complaint
4. Findings of the Whistle Blower Committee (or audit committee when the committee is required to be legally setup), the recommendations of the Committee/ other action(s).

An exclusive e-mail ID under the control of the Whistle Blower Committee has been set up to which any wrongful conduct can be reported by any Whistle Blower. The said email id is: - whistleblower@avantifinance.in

The nominated officer will carry out a preliminary analysis as to whether the complaint pertains to wrongful conduct or not or there is a prima-facie case and shall then refer the matter to the Whistle Blower Committee.

The Whistle Blower Committee, if deems fit, may call for further information or particulars from the Complainant.

7.3 Investigation Report

All Protected Disclosures reported under this Policy will be thoroughly investigated by the nominated officer of the Company who will investigate / oversee the investigations under the authorization of the Whistle Blower Policy or audit committee (when the committee is required to be legally setup). The nominated officer may at its discretion consider involving any investigators for the purpose of investigation.

The decision to conduct an investigation taken into a Protected Disclosure by itself is not an acceptance of the accusation by the authority. It is to be treated as a neutral fact-finding process because the outcome of the investigation may or may not support accusation; unless there are compelling reasons not to do so, Subjects will be given reasonable opportunity for hearing their side during the investigation. No allegation of wrongdoing against a Subject shall be considered as maintainable unless there is good evidence in support of the allegation.

The Subject shall have right to access any document/ information for their legitimate need to clarify/ defend themselves in the investigation proceedings.

The nominated officer shall normally complete the investigation within 45 days of the receipt of Protected Disclosure.

Based on a thorough examination of the findings, the nominated officer shall submit a report to the Whistle Blower Committee on a regular basis about all Protected Disclosures referred to him/her since the last report together with the results of investigations, if any.

The Committee shall look into the complaints report prepared by the nominated officer and can suo moto institute further investigation / call for additional documentary evidence before submitting its findings on the matter. The findings of the Whistle Blower Committee shall be suggested to the nominated Director for his / her decision (or the Audit Committee when required to be setup). The findings of the Whistle Blower Committee shall be suggested to the nominated Director for his / her decision (or the Audit Committee when required to be setup).

7.4 Appeal and Decision

If an investigation leads the nominated officer to conclude that an improper or unethical act has been committed which would result in suggested disciplinary action, including dismissal, if applicable; the nominated officer shall recommend to the Whistle Blower Committee of the Company to take such disciplinary or corrective action as he may deem fit. All discussions would be documented and the final report will be recommended by the Whistle Blower Committee and duly approved by the nominated Director.

If the report of investigation is not to the satisfaction of the Complainant, the Complainant has the right to report the event to the appropriate legal or investigating agency. A Complainant who makes false allegations of unethical & improper practices or about alleged wrongful conduct of the Subject shall be subject to appropriate disciplinary action in accordance with the rules, procedures and policies of the Company.

7.5 Confidentiality

Every effort will be made to protect the identity of the Complainant, subject to legal constraints except in cases where the Complainant turns out to be vexatious or frivolous and action has to be initiated against the Complainant. In the event of the identity of the Complainant being disclosed, the nominated officer can initiate appropriate action against the person making such disclosure.

7.6 Protection

The Company, as a policy, condemns any kind of discrimination, harassment, victimization or any other unfair employment practice being adopted against Whistle Blowers. Complete protection will therefore be given to Whistle Blowers against any unfair practice like retaliation, threat or intimidation of termination / suspension of service, disciplinary action, transfer, demotion, refusal of promotion or the like including any direct or indirect use of authority to obstruct the Whistle Blower’s right to continue to perform his duties / functions including making further Protected Disclosure.

A Whistle Blower may report any violation of the above clause to the Whistle Blower Committee or chairman of the audit committee, who shall investigate into the same and recommend suitable action to the Internal Complaint Committee.

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8. Record Keeping

All documentation pertaining to the complaint including the investigation report, corrective action taken and evidence will be maintained for a period of 8 years or such other period as specified by any other law in force, whichever is more.

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9. Reporting Requirements

The following are the reporting requirements -

1. The details of establishment of vigil mechanism shall be disclosed by the Company on the website, if any, and in the Board’s Report.
2. Whistle Blower Policy, and affirmation that no personnel has been denied access to the Board for reporting actions under the Whistle Blower Policy.

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10. Policy Review and Updates

The implementation of this Policy shall be monitored and reviewed annually by the Board of the Company.

This Policy was :

(i) Drafted on the behalf of the Company by : Mr. Nagaraj Subrahmanya, CRO

(ii) Internally reviewed by: Mr. Rahul Gupta, CEO

(iii) Approved by the Board of the Company on : February 14, 2019, Revision 1 on : January 10, 2020, Revision 2 on : March 13, 2023, Revision 3 on : October 31, 2023, Revision 4 on :  November 12, 2024

This Policy comes into effect from the date of Board approval.

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11. Definitions

1. Audit Committee: A committee constituted by the Board of Directors of the Company in accordance with Companies Act, 2013.

2. Protected Disclosure: 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.

3. Subject: a person against or in relation to whom a Protected Disclosure has been made or evidence gathered during the course of an investigation.

4. Whistle Blower/Complainant: an employee making a Protected Disclosure under this Policy. An employee making a disclosure under this process is commonly referred to as a complainant. The complainant is not expected to prove the truth of an allegation, the complainant needs to demonstrate that there are sufficient grounds for concern and expected to provide the complete details/evidences in his possession.

Code of Conduct Policy

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Frequently Asked Questions on Moratorium during of Covid -19

Based on the recommendation from RBI to grant Moratorium on the subject of Covid -19 Regulatory package (Circular dated RBI/2019-20/186 DOR.No.BP.BC.47/21.04.048/2019-20), Avanti has decided to grant all borrowers a moratorium for EMI deferment falling due between the period March 01, 2020 to May 31, 2020(upto 92 days).    Frequently Asked Questions  

1.  What is Avanti’s response to the RBI announcement of EMI deferment?

Res) In line with the RBI’s suggestion, Avanti has decided to grant moratorium for 3 months starting 1st March 2020.  Accordingly -

1. Loan tenure of all active loans will increase by 3 months (at least).
2. Borrowers have the option of making repayment during this 3 month period and accordingly their interest will be calculated. (Some borrowers have already paid their March EMI).
3. Non-payment of EMI in these 3 months will not affect the DPD and hence will not be reported as delay/default to credit bureaus.
4. Interest will continue to accrue on the outstanding portion of the loans during the moratorium period

2.  What does granting moratorium for EMI deferment mean?

Res) Moratorium for EMI deferment means -  A2.1 - Borrowers whose EMI was due in March 2020 will be due now in June 2020, A2.2 - Borrowers whose EMI was due in April 2020 will be due now in July 2020  A2.3 - Borrowers whose EMI was due in May 2020 will be due now in August 2020.  The original schedule of these borrowers will be accordingly adjusted. Any borrowers who are not able to pay as per their original schedule i.e., in March, April and May 2020 will not be reported as “default” to the credit bureaus.  

3.  Will the borrowers pay interest for this period of March 2020 to May 2020?

Res) Interest will continue to accrue (accumulate in simple terms) based on the outstanding balance on a daily basis for these loans. This additional interest will be paid along with the last instalment.  

4.  Can borrowers make repayments during this period till May 2020?

Res) Yes. Borrowers can continue making repayments during this moratorium period. Avanti encourages all borrowers whose income is less affected to continue making the repayment during this period.  This will help borrowers avoid paying additional interest at the end of the loan period.  

5.  What are the avenues for repayment available for the borrowers during the coming 2 months?

Res) Borrowers can make payment through digital modes like UPI, NEFT, IMPS, Banking correspondents to their Loan numbers (e-collect numbers).  

6.  Should the partner and agents continue collection on the field?

 Res) Considering the lockdown imposed by the Central government, Avanti strongly recommends all partners and agents not to go out for collections. However, you can reach out to the borrowers through tele-calling to educate them on the advantages of repayments, modes of digital payment, moratorium granted by Avanti etc. Continuous contact with borrowers will be crucial for you to ensure the collections effort is minimal from June 2020.  

7.  Should the borrowers/Partners inform Avanti through any official mode to avail this moratorium benefit?

 Res) Avanti, in consultation with its partners, has granted the moratorium to all loans due to the impact of COVID-19 on various livelihoods.  However, the borrowers can continue to make repayments to  their respective e-collect numbers, if they want to.  

8.  What about the overdue amount from previous months (Before March 2020)?

Res) The overdue amount will need to be paid by the borrower and there is no relief. Borrowers are strongly advised to use the digital modes of repayment to pay the overdue amount and thereby not accrue additional interest on them.  

9.  What if the borrowers have already paid their March 2020 due? Will this be refunded?

Res) Considering that the borrower has made their March 2020 due, it will be considered that they have made their June 2020 due amount (prepayment of due and hence lesser interest). However, Avanti strongly recommends the borrowers to continue making payments in June 2020 also. Thereby, they can pre-close the loan in a shorter period and pay lesser interest.

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Data Privacy and Security Policy

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Repayment Moratorium Policy of Avanti Finance Private Limited

Reserve Bank of India (RBI) has released the Statement of Developmental and Regulatory Policies on March 27, 2020 that directly addresses the stress in financial conditions caused by COVID-19. One of the policies relates to easing financial stress caused by COVID-19 disruptions by relaxing repayment pressures and improving access to working capital. In this area, RBI has permitted all lending institutions including NBFCs to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020. RBI has permitted to shift the repayment schedules and all subsequent due dates, as also the tenor for such loans across the board by three months. RBI has also asked all the lending institutions to put in place a Board approved policy in this regard. Our company being a Non-Banking Finance Company registered with RBI has framed the following policy after considering the policy guidelines issued by RBI vide circular no. RBI/2019-20/186 DOR. No. BP. BC. 47 / 21.04.048 /2019-20 dated March 27, 2020: Approved by the Board of Directors of Avanti Finance Private Limited on April 03, 2020 Relief measures approved by the Board for the retail loans outstanding as on March 31, 2020

1. All borrowers will be given the option of a moratorium for EMI falling due between the period March 01, 2020 to May 31, 2020 (upto 92 days) without a change in the EMI amount.

1. All borrowers will be given an option to continue making repayments falling due between the moratorium period in case their cash flows permit & they are not in favour of extending their loan tenure & paying additional accrued interest for the moratorium period.
2. Interest will continue to accrue on the outstanding portion of the term loans during the moratorium periodand will be collected along with the last EMI or additional installment.
3. The revised asset classification of the loans will be on the basis of revised due dates and the revised repayment schedule. The same will be shared with the Credit Information Companies (Regulatory requirement).

Relief measures approved by the Board for the institutional loans outstanding as on March 31, 2020 All institutional borrowers will be provided an option to opt for moratorium. However, decision pertaining to grant of moratorium will be solely made by Avanti, on a case to case basis. For further details, you may click here for FAQs related to moratorium under Covid-19. In case you seek any clarification, you may write to us at info@avantifinance.in.

Client Privacy Policy

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_{1. SCOPE AND PURPOSE OF THIS POLICY}

1. 1.1 In this Client Privacy Policy (“Policy”), “we” or “us” or “our” means Avanti Finance Private Limited (“Company”), and includes its executive directors, officers, employees, as the context may require.
2. 1.2 The scope of this Policy is to ensure the protection of interests of Clients (as defined below) of Company in respect of personal information shared by Clients with Company and provide a broad-level mechanism to regulate the use of such information by the Company.
3. 1.3 This Policy has been framed and adopted by us in line with our commitments under the Information Technology Act, 2000 and the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules,2011 and other applicable laws of India.
4. 1.4 This Policy applies to all persons (natural or juristic) who seek to or have availed loan from Company or from any other financial institution wherein Company acts in the capacity of business correspondent or any other similar capacity (“Clients”), and have, in the process, shared their personal information with Company (“Client Information”).

1. 1.5 This Policy delineates various measures that we shall endeavor to take in operationalising our commitment.
2. 1.6 By agreeing to avail the services offered by Company, Client agrees to the collection and use of Client Information by Company.

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‍_{2. TYPES OF CLIENT INFORMATION COLLECTED}

2.1 Company may, for the purpose of providing services to Clients, collect the following types of Client Information:

1. 2.1.1 Personal Information: Includes any information collected from the Client that is about his/her family, health, consumption behaviour, personal preferences, attitudes, beliefs or living conditions. It may include the following:
2. (i) Name, gender, residential / correspondence address, telephone number, date of birth, marital status, size of family, details of family members, email address or other contact information; and/or
3. (ii) PAN, KYC Status, signature and/or photograph.
4. No biometric data is stored/ collected in the systems, unless allowed under extant statutory guidelines

1. 2.1.2 Financial Information: Includes any information collected from the Client regarding his/her businesses, income, expenses, immoveable assets, moveable assets, loans outstanding, repayment history, guarantors, or collateral Bank account or other payment instrument details; or any other detail which may be required by us for providing services.

2.2 Client Information is collected from Client on a voluntary basis and is necessary in order for the Client to avail services from Company. Client is not required to provide the Client Information that the Company requests, and, if Client chooses not to do so, Company may not be able to provide Client with services or respond to any queries Client may have. Company and its affiliates may share this Client Information with each other and use it consistent with this Policy. They may also combine it with other information to provide and improve Company products, services, content, and advertising.

2.3 To ensure the accuracy and adequacy of the Client Information, Client shall at all times have the option of reviewing the same by requesting Us in the manner as provided under paragraph 7.2 of this Policy.

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_{3. PURPOSE OF COLLECTION}

3.1 Company collects, retains, and uses Client Information in order to provide financial and other services to Clients. Accordingly, such information is collected for specified business purposes, such as:

1. 3.1.1 to process financial and non-financial transaction request;
2. 3.1.2 to undertake research and analytics for offering or improving Company services;
3. 3.1.3 to check and process Client’s applications which may be submitted for availing any financial services;
4. 3.1.4 to share any updates/changes to the services and their terms and conditions with Client;
5. 3.1.5 to take up and investigate any complaints/claims/disputes;
6. 3.1.6 to respond to Client’s queries and feedback submitted by Client;
7. 3.1.7 for verification of Client’s identity and other parameters; and
8. 3.1.8 to fulfil the requirements of applicable laws / regulations and / or court orders /regulatory directives.

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_{4. DISCLOSURE OF CLIENT INFORMATION}

4.1 Company may disclose Client Information only under the following circumstances (List available at https://www.avantifinance.in/policies#digital-lending-complaince):

1. 4.1.1 RBI/SEBI/ NSE/ BSE/ MCX /Asset Management Companies of Mutual Funds /Registrar and transfer Agents / Collecting Banks / KYC Registration Agencies and other such agencies, solely for the purpose of processing your transaction requests for serving you better;
2. 4.1.2 To process loans with any other bank/non-banking financial company/other financial institution where Company is acting as agent/banking correspondent or in any similar capacity under a valid contract;
3. 4.1.3 As part of valid contracts with service providers such as Credit bureaus, NSDL etc; as required for the purpose of loan processing and any research agencies/ external consultants, etc.;
4. 4.1.4 Where Client has permitted Company to disclose Client Information to a third party located in India or outside India, Company shall ensure that there is written permission from the Client authorising the disclosure, except where the disclosure is required under law.

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_{5. RETENTION OF CLIENT INFORMATION}

1. 5.1 Company shall not retain or store Client Information for periods longer than is required except when such information may lawfully be used or is otherwise required under any other law for the time being in force or for the purpose of fraud prevention or regulatory compliance. Typically, Company may retain Client Information for 10 (ten) years. For the first 5 (five) years, such Client Information shall be deemed (for internal purposes) as `Active Data’ and which may be accessed by Company’s personnel (on a need-to-know basis) for the purpose of delivery of Company’s services, internal records management, permitted disclosure to third parties and/or compliance under law. Thereafter, provided there is no interaction of Company with the relevant Client, it shall be treated (for internal purposes) as `Passive Data’. Company’s personnel may be provided access to Passive Data only upon express written permission of Chief Risk Officer (CRO).
2. 5.2 By agreeing to avail the services offered by Company, Client has agreed to the collection and use of Client Information by Company. Client has the right to refuse or withdraw his/her consent to share/disseminate Client Information by contacting the Chief Operating Officer of the Company. However, in the event of your refusal or withdrawal of consent, Client shall not be able to avail any services of Company to the fullest extent.
3. 5.3 Data Destruction Practices: Subject to law, Company’s data destruction practice is set out herein. All computer desktops, laptops, hard drives, and portable media are processed for proper disposal. Paper and hard copy records shall be disposed of in a secure manner. The destruction of data shall address the following:
4. 5.3.1 evaluation and final disposition of sensitive information, hardware, or electronic media regardless of media format or type.
5. 5.3.2 procedures may include shredding, incinerating, or pulp of hard copy materials so that sensitive information cannot be reconstructed.
6. 5.3.3 Electronic Media (physical disks, tape cartridge, CDs, printer ribbons, flash drives, printer and copier hard-drives, etc.) shall be disposed of by one of the methods:
7. (i) Overwriting Magnetic Media - Overwriting uses a program to write binary data sector by sector onto the media that requires sanitization;
8. (ii) Degaussing - Degaussing consists of using strong magnets or electric degaussing equipment to magnetically scramble the data on a hard drive into an unrecoverable state.

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_{6. SECURITY PRACTICES AND CONTROL MECHANISM}

1. 6.1 Company uses commercially reasonable physical, managerial, and technical safeguards to preserve the integrity and security of Client Information. These include internal reviews of our data collection, storage and processing practices and security measures, such as appropriate encryption and physical security measures to guard against unauthorized access to systems where we store personal data.
2. 6.2 Company maintains physical and electronic safeguards to protect Clients’ personal and financial information. Company has placed the mechanisms outlined below to ensure information – both physical and electronic data storage, access, retrieval, sharing of data.

Information Management and Data Security

1. 6.3 Records may be transferred from and between offices of Company/ third party service providers for record keeping purposes. We ensure that such third-party service providers maintain strict confidentiality (ensuring the same level of confidentiality as maintained by Us) in respect of Client Information.
2. 6.4 The database of current Clients and those Clients who do not have any current loan outstanding with Company are properly archived and kept and stored in the same manner as we store data/ documents of our Clients.
3. 6.5 All Client data/ records/ documents/ information shall be maintained by Company for such time period as may be required as per applicable laws.

_{Specific Authorization}

1. 6.6 Authorized personnel may see data from all the branches, but rights to edit or modify the data are given to select personnel with specific login access.
2. 6.7 Client database changes require the Chief Risk Officer, Chief Operating Officer and Chief of Partnerships to authorise / approve the changes.
3. 6.8 Each personnel who accesses the database uses an individual username and password.
4. 6.9 Whenever an employee logs into the database, their name, the information they query.
5. 6.10 Company has a strong back-up system in which it uses a combination of hardcopy and digital backups of Client information. Company’s system backs- up all information on our cloud servers located in India periodically.

_{7. COMPLAINT REDRESSAL MECHANISM}

7.1 It is the Company’s constant endeavour to put the interests of its Clients first and to provide them with financial solutions that are right for them. In keeping with its promise, the Company looks forward to receiving both positive and negative feedback from the Clients on its products and services.

7.2 Any discrepancies and grievances related to the processing and use of Client information can be raised to the grievance officer appointed by Company as below:

Nodal Officer

Name: Saurabh Kumar

Designation: Nodal Officer

Email: saurabh.kumar@avantifinance.in

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Grievance Officer

Name: Sunil K Tadepalli

Designation: Grievance Officer

Email: sunil.kumar.t@avantifinance.in

The grievances of the Clients will be redressed in the manner provided below:

(i) Clients can register grievances through email id and toll-free number provided at the Company’s branches / Head Office / website and at any other place where the business of the Company is transacted.

(ii) After examining the matter, the Company will endeavour to send the Client its response expeditiously and intimate the stakeholder how to escalate the complaint to higher level, if they are not satisfied with the response.

(iii) Clients have to confirm whether the grievance has been resolved to their satisfaction or not. The grievance will be deemed to be closed, if Client does not respond via toll free number or email.

(iv) The Company shall also request the Client to provide feedback on the services rendered. This can be done through direct contact by staff or through specific stakeholder satisfaction surveys that may be conducted from time to time.

(v) A periodical review of the above mechanism at various levels of management would be undertaken by the Company.

_{8. POLICY REVIEW UPDATED}

This document shall be reviewed by the CRO and shall be reviewed at least once a year. Reviews shall also account for any significant business changes and/or any regulatory requirements.

This Policy was:

(i) Drafted on behalf of the Company by: Mr. Manish Thakkar, COO and the time when the request is made, are all recorded in a query log.

(ii) Internally reviewed by: Mr. Nagaraj Subrahmanya, CRO

(iii) Approved by the Board of the Company on: June 05, 2021, Revision 1 on: March 13, 2023, Revision 2 on: August 10, 2023, Revision 3 on: October 31, 2023, Revision 4 on: December 19, 2024.

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Charter for IT Steering Committee

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Charter for IT Strategy Committee

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Cyber Security Policy

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Policy on Asset Classification and Provisioning

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Terms of Reference – Credit Committee

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Credit Risk Management Policy

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1. Introduction

Avanti Finance Private Limited (hereinafter referred to as ‘the Company’) has framed the Credit risk Management policy (hereinafter referred to as “Policy”) to set out the guidelines, principles and approach to manage credit risks for the Company and put in place a framework to identify, assess, measure, monitor and control credit risks in a timely and effective manner.

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2. Objectives of the Policy 

The key objectives of the Policy are as under:

The Policy has been designed to achieve the following key objectives:

(i) Establish a governance framework to ensure an effective oversight, segregation of duties, monitoring and management of credit risk in the Company.

(ii) Lay down guiding principles for setting up & monitoring of the credit risk appetite & limits.

(iii) Establish standards to facilitate effective identification and assessment of credit risks in the Company enabled by the internal credit scoring framework.

(iv) Establish standards for effective measurement and monitoring of credit risk.

(v) Achieve a well-diversified portfolio enabled by concentration risk management and maintaining credit risk exposures within established credit limits.

(vi) Establish principles for credit risk stress testing for securitisation arrangement and portfolio purchased by the company.

(vii) Enable monitoring of credit risk by way of Early Warning Signals (EWS).

(viii) Adhere to the guidelines/policies related to credit risk management, as issued by the Reserve Bank of India (RBI) from time to time.

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3. Scope

This aims at outlining the Company’s credit risk management framework and establishing the guidelines for offering the products i.e. Line of Credit, Personal Loan and Farmer Financing products for credit risk mitigation purposes.

The Company will also have its own benchmark rate which shall be determined on the basis of considering the average cost of funds including administrative cost and average return on net worth which the risk management committee/department and finance department will determine / review on quarterly basis.

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4. Credit Risk Governance Framework 

The credit risk governance framework establishes the responsibility and approach through which the Board of Directors and the management functions (i.e., Business, Risk, Internal Audit functions) of the Company govern credit risk management issues. An effective governance framework ensures the independence of the credit risk function (i.e., risk managing function) from the business function (i.e., risk taking function). Through an effective Board-approved credit risk governance framework, the Company seeks to ensure adequate risk oversight, monitoring and control of credit risks.

The Company has set out the following governance structure and corresponding roles and responsibilities for the effective management of credit risk.

4.1. Governance Structure 

The credit risk governance framework is designed with consideration to the following key principles:

(i) Risk Management department will take the risk, manage the risk, will do the risk reporting and analysis, and will be responsible for implementing corrective actions to address process and control deficiencies. Board of Directors will provide policy guidance and recommendations.

(ii) Risk Management Department shall retain accountability for managing the credit risks.

(iii) The governance structure shall promote transparency, accountability, communication and flow of information.

(iv) The Board would be responsible for firm-wide credit risk management.

(v) Senior management understands all the products / activities of the Company giving rise to credit risk and understands the basis of the credit risk management framework.

(vi) The Company has staff with sufficient expertise and appropriate skill sets to perform risk management tasks and is supported by appropriate tools and technology.

(vii) All material credit risks are identified and measured, exposures are aggregated and management attends to the risky exposures.

Based on the above guiding principles, the credit risk governance framework of the Company comprises of the following:

(a) Board of Directors (“BoD”)

(b) Risk Management Committee (“RMC”)

4.2. Board of Directors

The Board of Directors (“Board”) of the Company is responsible for providing oversight for overall credit risk management at the Company. The key responsibilities of the Board relating to credit risk management include:

(i) Approving and periodically reviewing the business and credit risk management strategy and the credit risk appetite.

(ii) Approving the credit risk management policy and framework as required.

(iii) Ensuring the establishment of a robust credit risk management culture by delegating responsibilities for key decision making and controls to appropriate management authorities.

(iv) Assessing the adequacy of capital needed to support business activities undertaken by the Company.

(v) Provide adequate supervision for the decisions taken by the delegated authority.

4.3. Risk Management Committee 

The Risk Management Committee is a committee of the Board of the Company. The key responsibilities of the Risk Management Committee relating to credit risk management include:

(i) Ensure implementation of credit risk policy and strategy approved by the Board.

(ii) Monitor quality of loan portfolio at periodic intervals, identifying problem areas and issuing directions for rectifying deficiencies.

(iii) Monitor credit risks on the Company-wide basis and ensuring compliance with the approved risk parameters/ prudential limits and monitor risk concentrations including geographic exposures as per Credit Concentration Risk norms;

(iv) Incorporate regulatory compliance in the Company’s policies and guidelines in regard to credit risk;

(v) Review the use of internal risk rating systems for business and risk management purposes and placing recommendations before the Board;

(vi) Bring to the attention of Board material issues for information / recommendation / approval; and

(vii) Review and approve the credit risk stress testing scenarios, results and analysis.

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5. Products

The Company intends to offer following products to customer including but not limited to:

(i) Term Loans for meeting working capital / project funding to organisations

(ii) Individual loans, specifically:

(a) Livelihood Loans

(b) Microfinance Loans

(c) Agriculture and Livestock Loans

(d) Personal Loans

(e) Medical, education and Emergency Loans

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6. Portfolio Monitoring

6.1 Portfolio Trigger

(a) This will be managed and monitored by Risk Management Department.

(b) Trigger will be implemented based on criteria such as Delinquency at a partner level exceeds 5% of the total loan disbursed and other criteria as defined by the Risk Management department.

6.2 Process of visiting delinquent customers

(i) Delinquent customers are visited as part of the regular monitoring and the reasons for delinquency is evaluated.  .

(ii) After visits, reports are submitted to the Risk team in standard format and concluded within 15 working days.

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7. Policy Review and Updates 

This Policy represents the minimum standards for credit risk management and is not a substitute for experience, common sense and good judgment. Given that the Credit Risk Management Policy is to be flexible and responsive to changing market and regulatory conditions, it will be reviewed by the Chief Risk Officer (CRO) from time to time and any revisions will be updated at least annually or as necessary. In the event that clarification on interpretation is required, consultation must first be sought from the risk function.

The Policy shall be approved by the Board of Directors and put up for review to the Risk Management Committee at least annually.

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8. Regulatory References

Master Direction- Reserve Bank of India (Non-Banking Financial Company- Scale Based Regulation) Directions, 2023.

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9. Key Definitions

(i) Credit Risk: Credit risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers or counterparties. In the Company’s portfolio, losses stem from outright default due to inability or unwillingness of a borrower to meet commitments in relation to settlement.

(ii) Borrower: Borrower is defined as any entity or individual that the Company has credit exposure to.

(iii) Exposure: Exposure will include credit exposure to partners or organizations (B2B loans). The sanctioned limits or outstanding to partners or organizations (B2B loans), whichever are higher, shall be reckoned for arriving at the exposure limit.

(iv) Credit Score: Credit score is a numeric value derived using product-specific scorecards (generally referred to as credit scorecards), that determine the riskiness of a borrower application for a particular asset product. The credit score generally considers credit history, income characteristics, borrower capacity to pay as well as product-specific characteristics. The score cards wherever used, will be developed, validated and approved by designated authorities and assignment of scores to credit applicants/loan accounts will be automated.

(v) Credit Concentration Risk: Risk concentration refers to the risk that any single exposure or group of correlated exposures (within the same activity / industry / geography / any other segment) which may potentially produce losses large enough (relative to the Company’s capital, totals assets, or overall risk level) to threaten Company’s health or ability to maintain its core operations. To mitigate these risks, there are state-wise exposure limits based on a percentage to the total loans given by the Company and others as may be decided by the company.

(vi) Early Warning Signals: Early warning signals help in early identification and reporting of problem accounts and is the first step towards containing slippages and minimising the risk of loss. Borrowers could be identified as weak on the occurrence of various triggers relating to performance on existing loan account or any other factors that may negatively affect the repayment behaviour of the borrower.

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10. Policy Review and Updates

The implementation of this Policy shall be monitored and reviewed periodically by the Board of the Company.

This Policy was:

(i) Drafted on behalf of the Company by: Mr. Nagaraj Subrahmanya, CRO

(ii) Internally reviewed by: Mr. Rahul Gupta, CEO

(iii) Approved by the Board of the Company on: October 30, 2017, Revision 1 on September 30, 2022, Revision 2 on: March 13, 2023, Revision 3 on: December 19, 2024.

This revised Policy comes into effect from date of approval of the Board.

Information Technology Governance Policy

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Securitisation of Standard Assets – PTC (Pass through Certificate) Policy

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1. BACKGROUND

The Reserve Bank of India has notified Master Directions - Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021 (“Directions”). In line with the Directions and as a matter of good governance, Avanti Finance Private Limited (hereinafter referred to as “Company” which term includes its successors and assigns) has sought to adopt this policy towards undertaking securitisation transactions.

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2. KEY DEFINITIONS AS PER THE DIRECTIONS

“securitisation” means a structure where a pool of assets is transferred by an originator to a SPE and the cash flow from this pool of assets is used to service securitisation exposures of at least two different tranches reflecting different degrees of credit risk, where payments to the investors depend upon the performance of the specified underlying exposures, as opposed to being derived from an obligation of the originator;

“securitisation notes” mean securities issued by the special purpose entity as a part of securitisation;

“special purpose entity (SPE)” means a company, trust or other entity organised for a specific purpose, the activities of which are limited to those appropriate to accomplish the purpose of the SPE, and the structure of which is intended to isolate the SPE from the credit risk of an originator. Any reference to SPE also refers to the trust settled or declared by the SPE as a part of the process of securitisation;

“standard assets” means exposures which are not classified as non-performing asset;

"originator" refers to a lender that transfers from its balance sheet a single asset or a pool of assets to an SPE as a part of a securitisation transaction and would include other entities of the consolidated group to which the lender belongs.

Definitions of other terms used in this policy are as stated in the Directions.

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3. PERMITTED TRANSFERORS

3.1 Securitisation is permitted to the following entities:

a) Scheduled Commercial Banks;

b) All India Financial Institutions (NABARD, NHB, EXIM Bank, and SIDBI);

c) Small Finance Banks; and

d) All Non-Banking Finance Companies (NBFCs) including Housing Finance Companies (HFCs).

3.2 Permitted Assets

3.2.1 Except as provided under paragraph 3.2.2, all on-balance sheet exposures of originators, which are in the nature of loans and advances and are classified as standard assets, are eligible as underlying assets in a securitisation transaction.

3.2.2 Following exposures shall not be allowed for the purpose of securitisation:

a) Re-securitisation exposures;

b) Structures in which short term instruments such as commercial paper, which are periodically rolled over, are issued against long term assets held by a SPE;

c) Synthetic securitisation;

d) Securitisation with the following assets as underlying:

(i) revolving credit facilities as underlying – these involve underlying exposures where the borrower is permitted to vary the drawn amount and repayments within an agreed limit under a line of credit (e.g. credit card receivables and cash credit facilities);

(ii) Restructured loans and advances which are in the specified period;

(iii) Exposures to other lending institutions;

(iv) Refinance exposures of AIFIs;

(v) Loans with bullet payments of both principal and interest as underlying; and

(vi) Loans with residual maturity of less than 365 days.;

e) subject to Directions, agriculture loan extended to individual where loan tenure is more than 24 months and  up to 24 months but both interest and principal are not due on maturity; and

f) Trade receivables with tenor more than 12 months discounted/purchased by lenders from their borrowers.

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4. KEY RESPONSIBILITIES

4.1 Specific responsibility of Originator

4.1.1 The originator i.e., Company, of such securitisation shall have satisfied the Minimum Holding Period requirement as per Clause 39 of the Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 including the proviso to the above Clause.

4.1.2 Company shall adhere to the requirements of Minimum Retention Requirement (MRR) as provided in the Directions while securitising loans leading to issuance of securitisation notes.

4.1.3 Company would follow stringent underwriting standards. There shall not be any difference in the criteria for credit underwriting applied by the Company on exposures retained on the balance sheet of the Company vis-a-vis exposures securitised.

4.1.4 The total exposure of an originator to the securitisation exposures should be as per Clauses 25, 26 and 27 of the Directions.

4.1.5 The minimum ticket size for issuance of securitisation notes shall be INR 1 crore. Listing  of securitisation notes, especially in respect of certain product class, such as residential mortgage backed securities (RMBS), and/or generally above a certain threshold is recommended, though not mandatory. Any offer of securitisation notes to fifty or more persons in an issuance would be required to be listed as per SEBI Regulations (Issue and Listing of Securitised Debt Instruments and Security Receipts), 2008.

Priorities of payments for all liabilities have to be clearly defined at the time of securitization with full transparency over any changes to the cash flow waterfall, payment profile or priority of payments that might affect a securitisation and all triggers affecting the cash flow waterfall, payment profile or priority of payments of the securitisation should be clearly and fully disclosed in offer documents and in investor reports.

4.1.6 Securitisations featuring a replenishment period shall include provisions for appropriate early amortisation events and/or triggers of termination of the replenishment period and other terms as mentioned in Directions.

4.1.7 Company transferring assets to Special Purpose Entity (SPE) may make representations and warranties concerning those assets and undertake to hold capital against such representations and warranties if any of the conditions referred in Clause 32 of the Directions are not satisfied.

4.1.8 Company may provide supporting facilities such as credit enhancement facilities, liquidity facilities, underwriting facilities and servicing facilities but should be as per conditions outlined in Chapter IV of the Directions.

4.1.9 Company has to maintain capital against the exposures transferred to the SPE, which then forms the underlying for securitisation notes issued by the SPE, i.e., the exposures transferred to the SPE must be included in the calculation of risk-weighted assets of the originator and the consideration received from SPE must be recognised as an advance, unless at least conditions mentioned in Clause 81 of the Directions are satisfied tax and regulation.

4.1.10 The transactions undertaken in terms of the Directions must not contravene the rights of underlying obligors. To ensure compliance with this stipulation, enabling clauses must be included in the contract between Company and servicing agent (if any) and all necessary consent from obligors (including from third parties), where necessary as per the respective contracts, should have been obtained.

4.2 Specific responsibility of Company who is Investor in Securitisation:

4.2.1 Company should invest in securitised notes only if the originator has explicitly disclosed to the purchasing lenders that it has adhered to the MRR and MHP requirements and will adhere to MRR on an ongoing basis, as applicable and advised in the Directions.

4.2.2 Company should be able to access performance information on the underlying pools on an ongoing basis. Such information may include:

(a) the average credit quality through average credit scores,

(b) extent of diversification of the pool of loans,

(c) volatility of the market values of the collaterals supporting the loans,

(d) prepayment rates,

(e) property types,

(f) occupancy, etc.

4.2.3 Company should take note of, analyse and record the following while taking the decision regarding a securitisation exposure:

(a) Reputation of originators,

(b) Loss ratio of originators,

(c) Valuation concept and methodology of collateral;

(d) Disclosures made by the originator.

4.2.4 Company will share with the Board the valuation approach being adopted and the process of credit monitoring proposed before investing in securitisation notes. This will, inter alia, include:

(a) the models used for valuation,

(b) the assumptions underpinning the models, the policy regarding back-testing, and

(c) stress testing the valuation model and its parameters etc.

4.2.5 Company needs to monitor on an ongoing basis and in a timely manner, performance information on the exposures underlying their securitisation positions and take appropriate action, if any, required. Action may include modification to exposure ceilings to certain type of asset class underlying securitisation, modification to ceilings applicable to originators etc.

4.2.6 Company should maintain capital against all securitisation exposure amounts, including those arising from the provision of credit risk mitigants to a securitisation transaction, investments in asset-backed or mortgage-backed securities, retention of a subordinated tranche, and extension of a liquidity facility or credit enhancement.

For the purpose of computing capital to be maintained and the exposure amount, reference may be drawn to Clauses 73 and 74 of the Directions.

For the purpose of calculating capital requirements, in respect of exposures that do not meet the requirements of Chapter IV of the Directions, transferee shall maintain capital charge equal to the actual exposure acquired.

4.2.7 Company should compute risk-weight for rated securitisation exposures via Securitisation External Ratings Based approach (SEC-ERBA), for unrated securitisation exposures, buyer to maintain capital charge equal to the actual exposure. The capital requirement for any securitisation position should not exceed the securitisation exposure amount.

4.2.8 Company should compute risk weight as per external ratings-based approach (SEC- ERBA) will be determined by multiplying securitisation exposure amounts by the appropriate risk weights as determined by Clauses 102 to 104 of Directions for securitisation exposures that are externally rated, provided that the criteria mentioned in Clause 101 of the Directions are met.

4.2.9 The Directions have laid down clear guidelines on derecognition of transferred assets for capital adequacy. Buyer should ensure that originator should satisfy the conditions below in order to achieve de-recognition:

a) Originator should not have any control over the transferred exposures. The originator shall be considered to have retained effective control over the exposures if:

(i) It is able to repurchase the exposures from the SPE in order to realise the benefits,or

(ii) It is obligated to retain the risk of the transferred exposures.

b) Except for clean-up calls, the originator should not be able to repurchase the exposure.

c) The securitisation notes issued by SPE are not obligations of the originator. Thus, the investors who purchase the securitisation notes have a claim only to the underlying exposures.

d) The transferred exposures are legally taken isolated in such a way that they are beyond the reach of the creditors in case of bankruptcy or otherwise.

e) As per the Directions, the holders of the securitisation notes issued by the SPE against the transferred exposures have the right to pledge or trade them without any restriction, unless the restriction is imposed by a statutory or regulatory risk retention requirement.

f) The originators must not be obligated to replace loans in the pool in case of deterioration of the underlying exposures to improve the credit quality.

g) The originator should not be allowed to increase the credit enhancement provided at the inception of the transaction, after its commencement.

h) The securitisation does not contain clauses that increase the yield payable to parties other than the originator such as investors and third-party providers of credit enhancements, in response to a deterioration in the credit quality of the underlying pool.

i) There must be no termination options or triggers to the securitisation exposures except eligible clean-up call options or termination provisions for specific changes in tax and regulation.

4.2.10 Company may invest in such securitised notes where the originator has explicitly disclosed that the applicable provisions of the Reserve Bank of India (Know Your Customer (KYC) Directions, 2016 (as amended from time to time) shall be complied with in all cases.

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5. REPORTING RESPONSIBILITY

Company shall submit the details of the securitisation transactions undertaken, including the details of the securitisation notes issued, to the Reserve Bank of India on a quarterly basis in the format shared by RBI.

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6. ACCOUNTING AND DISCLOSURE

6.1 Company can sell assets to SPE only on cash basis and the sale consideration should be received not later than the transfer of the asset to the SPE. Further, there should not be a gap of more than 30 days between transfer of the assets and the issuance of securitisation notes. In case of other lenders, any loss, profit or premium realised at the time of the sale should be accounted accordingly and reflected in the Profit & Loss account for the accounting period during which the sale is completed.

6.2 Accounting treatment in the case of unrealised gains arising out of sale of underlying assets need to be done as per the Clause 36 of the Directions.

6.3 Appropriate disclosures to be made in financial statements as per Clauses 116 and 117 of the Directions.

6.4 Disclosure in respect of the weighted average holding period of the assets securitised and the level of their MRR in the securitisation as per Clauses 112 and 113 of the Directions made to investor in investor report should be as per format prescribed in Clause 115 of the Directions.

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7. INDEPENDENCE

The functioning and reporting responsibilities of the units and personnel involved in acquisition of loan exposures shall be independent from that of personnel involved in loan origination.

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8. IT SYSTEMS

Requisite IT systems for capture, storage and management of data pertaining to the acquired loan exposures and towards meeting the compliance requirements under the Directions shall be established.

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9. BOARD OVERSIGHT

The policy shall be reviewed by the Board of Directors on an annual basis and the implementation of this policy shall be monitored and reviewed periodically by the Board of Directors.

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10. REGULATORY REFERENCE

Master Direction – Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021

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11. RECORD OF UPDATES:

This Policy was:

11.1 drafted on behalf of the Company by: Ankit Hurkat

11.2 internally reviewed by: Manish Thakkar

11.3 approved by the Board of the Company on: March 11, 2022, Revision 1 on: March 13, 2023, Revision 2 on: November 12, 2024.

This policy comes into effect immediately on the above date of approval.

Terms of reference – Risk Committee

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1. Introduction

Avanti Finance Company Private Limited (“Company”) considers ongoing risk management to be a core component of the Management of the Company, and understands that the Company’s ability to identify and address risk is central to achieving its corporate objectives. 

Risk can represent both a threat and an opportunity for the Company and is a fundamental factor in the success or failure of our business. Company promotes a risk-aware corporate culture to support key decisions made in the business. Our employees can identify risk through integrated risk analysis and then manage these risks to enhance commercial opportunities or reduce threats to maintain and build competitive advantage. 

2. Purpose & Objective of the Risk Committee: 

• a). To advise and assist the Board in its oversight of the design and effectiveness of the Enterprise Risk Management Framework.
  
• b)  To advise and assist the Board of Directors in fulfilling its oversight responsibilities with regards to the risk appetite of the Company, its risk management and compliance framework and the governance structure that supports it.
  
• c)  Overseeing risk appetite and risk tolerance appropriate to each business area
  
• d)  Ensuring that there are adequate enterprise-wide processes and systems for identifying
  and reporting risks and deficiencies, including emerging risks
  
• e)  To ensure alignment of the risk framework with the Company’s growth strategy,
  supporting a culture of risk taking within sound risk governance
  
• f)  To monitor all material aspects of the risk profile and to notify the board of any material
  changes or exceptions to established risk policies 

3. Authority 

• 3.1.  The Risk Committee (the “Committee”) is a committee of the Board of the Company from which it derives its authority and to which it regularly reports. 
• 3.2.  The Committee has delegated authority from the Board in respect of the functions and powers set out in these Terms of Reference. 
• 3.3.  The Committee has authority to investigate any matter within its Terms of Reference and to obtain such information as it may require from any director, officer of the company, employee or Partner. 
• 3.4.  When required, the Committee may delegate matters to a panel comprising a minimum of two members of the Committee plus such additional individuals with relevant expertise as deemed appropriate, and subject to terms of reference (including protocols for escalation to the Committee) as determined by the Committee.
  
• 3.5.  In addition, the Committee may have delegated authority from the Board for oversight of specified strategic, cultural or transformational projects led by the Executive.
  

4. Constitution 

• 4.1.  The Committee will be composed of Elected or Nominated Board Members, CEO of Company, heads of various risk verticals as well as other personnel as required and ratified by the Board. 
• 4.2.  The Committee members present shall elect one of themselves to chair the meeting.
  
• 4.3.  Members of the Committee shall be appointed by the Board.
  
• 4.4.  Working groups of the Committee may be established by the Committee for specific
  tasks and activities, including for analysis, consultations and escalations as appropriate; such groups may be comprised of representatives of the Committee and other individuals with relevant expertise.
  
• 4.5.  Members may be removed from the Committee at any time before the end of their term by the Board.
  
• 4.6.  Unless otherwise determined, the duration of appointments of members of the Committee and of co-opted members shall be for a period of up to 2 years which may be extended for an additional period of 1 year.
  

5. Proceedings of Meetings 

5.1.  Frequency of Meetings
5.1.1.  Meetings of the Committee may be called by the Chair of the Committee at any time to consider any matters falling within these Terms of Reference, but at a minimum on a quarterly basis. 

5.2 Quorum for Risk Committee 

• 5.2.1  A quorum will require the presence of at least 50% or 3 of the committee members, whichever is higher
  
• 5.2.2  A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions 

6. Attendees

6.1  Risk committee attendees 

• 6.1.1  Only the members of the Committee and other Elected and Nominated members of the Board and Independent Non-Executives directors have the right to attend Committee meetings and the right to cast a vote, if called upon.
  
• 6.1.2  The following will be expected to attend Committee meetings on a regular basis (as and when appointed): 
• a)  Chief Executive Officer;
  
• b)  Chief Risk Officer;
  
• c)  Chief Operating Officer;
  
• d)  Chief of Partnerships; 
• e)  Chief Financial Officer;
  
• f)  General Counsel;
  
• g)  Head of Regulatory Affairs;
  
• h)  Head of Internal Audit;
  
• i)  Head of Corporate Affairs; and
  
• j)  Company Secretary 

6.2 ALCO committee attendees 

• 6.2.1  The members of the Committee, management team members (on a special invite basis) have the right to attend Committee meetings and the right to cast a vote, if called upon.
• 6.2.2  The following will be expected to attend Committee meetings on a regular basis (as and when appointed): 
• a)  Chief Executive Officer;
  
• b)  Chief Risk Officer;
  
• c)  Chief Operating Officer;
  
• d)  Chief of Partnerships
  
• e)  Chief Financial Officer / Head of Finance; 

7. Powers of Risk Committee: The Risk committee shall have the powers – 

• a)  Investigate any matter within its terms of reference and seek information from any director, office of the company, employee or Partner. 
• b)  To obtain advice from auditors or lawyers or experts, retain services of external consultants for redressing issues relating to and arising from risk management framework.
  
• c)  To call for any information, documents, records from any officers of the Company for ascertaining the adherence to the Risk policies, procedures and standards laid for effective monitoring, evaluating and reporting of risks.
  
• d)  To institute and periodically review the terms of reference of the Asset Liability committee (ALCO) 

8. Roles and responsibilities of the Committee 

• a) Review and recommendation to the Board of Directors (Board) for approval: 
• i.  Enterprise Risk Management (ERM) framework for the Company and its subsidiaries
  
• ii.  Risk appetite for the Company
  
• iii.  Stress testing framework
  
• iv.  Internal Capital Adequacy Assessment Process (ICAAP)
  
• v.  Framework for capital allocation.
  
• b)  Review the policies pertaining to credit, market, liquidity, operational, outsourcing, reputation risks and business continuity plan, disaster recovery plan and limits for each risk category would be a part of the respective Policy for amendments as necessary based on changes in regulatory guidelines, risk environment and business considerations and recommendation to Board for approval
• c)  Review key risk indicators, level and direction of major risk categories as detailed below on a quarterly basis:
• i. Credit risk: corporate, retail, small enterprises, rural, micro-banking and agri portfolio 
• ii.  Market risk: interest rate risk, credit spread risk, foreign exchange risk and equity risk
  
• iii.  Liquidity risk: domestic and international operations
  
• iv.  Operational risk: process risk, people risk, technology risk, event risk, outsourcing risk
  and reputation risk
  
• v.  Compliance risk: domestic
  
• vi.  Capital at risk 
• d)  Review of outsourcing activities
  
• e)  Review report on activities of Asset Liability Management Committee
  
• h)  Review of Cyber Security Risk on periodic basis.
  
• i)  Setting limits on any industry, sector or country
  
• j)  Authorised to delegate above mentioned functions to sub-committees (comprising members of Risk Committee and/or whole-time directors).
  
• k)  To keep the board of directors informed about the nature and content of its discussions, recommendations and actions to be taken.
  
• l)  The Risk Committee shall coordinate its activities with other committees, in instances where there is any overlap with activities of such committees, as per the framework laid down by the board of directors.
  
• m)  Advise the Board in relation to its determination of overall risk appetite, tolerance levels and strategy, taking account of the Company’s values and public interest purpose, as well as the current and prospective regulatory, macroeconomic, technological, environmental and social developments and trends that may be relevant for the Company’s risk policies
  
• n)  Using internal and external sources of assurance monitor the robustness of the Company’s risk management policies and processes, including the Company’s Enterprise-Wide Risk Management Framework and their fitness for purpose when tested against the Board’s strategy and risk appetite;
  
• o)  Consider and review the prevailing risk culture in the organisation (values, beliefs, knowledge, attitudes and understanding about risk) and maintain oversight of relevant work streams and projects to bring about the desired risk culture which may include specific training when required
  
• p)  Review the integration of risk management and control objectives (and consequences) in the compensation structure
  
• q)  Annually review and approve the Executive Committee’s objectives and goals in relation to risk management
  
• r)  Provide advice and assurance to the Board by adopting a holistic and enterprise-wide view of the Company and the key risks that it is exposed to, assessing the adequacy and effectiveness of the Company’s adoption of the Enterprise-Wide Risk Management Framework;
  
• s)  Consider and review the prevailing risk culture in the organisation (values, beliefs, knowledge, attitudes and understanding about risk) and maintain oversight of relevant work streams and projects to bring about the desired risk culture;
  
• t)  Ensure the internal audit work plan is aligned to the identified risks
  
• u)  Review regularly and approve the parameters used in risk assessment measures and
  the methodology adopted
  
• v)  Review the Company’s adherence to all applicable regulations as updated from time to time by various regulatory authorities
  
• w)  Before a decision to proceed is taken by the Board, advise the Board on proposed strategic transactions including acquisitions or disposals ensuring that a due diligence appraisal of the proposition is undertaken, focusing in particular on risk aspects and implications for the risk appetite and tolerance of the Company, and taking independent external advice where appropriate and available
  
• x)  Review reports on any material breaches of risk limits and the adequacy of proposed action
  
• y)  Review and approve the statements to be included in the annual report concerning risk management
  
• z)  Review and monitor management’s responsiveness to the findings and recommendations of the CRO 

9. Review of Terms of Reference: 

The Committee shall annually review its Terms of Reference and may recommend to the Board any amendments to its Terms of Reference. 

10. Amendment: 

Any change in the Policy shall be approved by the Board of Directors or any of its Committees (as may be authorized by the Board of Directors in this regard). The Board of Directors or any of its authorised Committees shall have the right to withdraw and / or amend any part of this Policy or the entire Policy, at any time, as it deems fit, or from time to time, and decision of the Board or its Committee in this respect shall be final and binding. 

11. Record of updates: 

This TOR was: 

• (i)  drafted on behalf of the Company by: Nagaraj Subrahmanya, CRO
  
• (ii)  internally reviewed by: Rahul Gupta, CEO
  
• (iii)  approved by the Board of the Company on: September 30, 2022, Revision 1 on March 13, 2023 

This TOR comes into effect immediately on the above date of approval. 

Terms of reference- IT Strategy Committee

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Risk Management Policy

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Introduction

Avanti Finance Private Limited (hereinafter referred to as ‘the Company’) has framed the Risk Management Policy to set out the guidelines, principles and approach to manage risks for the Company and establish a risk culture and risk governance framework to enable identification, measurement, mitigation and reporting of risks within the Company.

1. Objectives of the Policy

The key objective of the Risk Management Policy aims at the following:

(i) To understand the company's risk profile, define the risk appetite, tolerance and limits that the company is willing to undertake to achieve its strategic and business objectives.

(ii) To understand the requirement of Capital adequacy, Fraud reporting, Asset liability management, Liquidity Risk Management etc.

(iii) To enable the company to monitor risk - reward at corporate and business unit level thereby integrating/ embedding risk management in business decisions.

(iv) To assist in anticipating risk in order to take proactive actions instead of depending on reactive risk management actions through continuous activities such as risk identification, risk assessment, mitigation, monitoring and reporting.

(v) To embed risk management in all the processes and decision making such that the Senior Management is in a position to make informed business decisions based on risk assessment.

2. Guiding Principles for the Risk Management Framework

The guiding principles of the risk management framework as defined in COSO framework are as follows:

(i) Risk Management principles are incorporated into strategy and objective setting processes as well as the day-to-day activities and decision-making.

(ii) Risks are understood and prioritized based on the event frequency and impact to one or more objectives.

(iii) The same metrics used to measure objectives e.g., revenue, regulatory compliance etc. are leveraged during risk management activities.

(iv) Risk response strategies are evaluated for those risks deemed to be high or medium priority.

(v) Key risk management information (e.g., key events, results of risk assessments, risk responses) is documented in a timely and structured manner.

(vi) A portfolio view of risks is presented to the Risk Management Committee on a regular basis.

3. Event and Risk

Event:

In order to understand risk, one needs to define an 'Event'. An event is an incident or occurrence from internal or external sources that affects achievement of objectives. Events can have negative impact, positive impact, or both.

A series of events from internal or external sources has the potential to affect strategy implementation and achievement of objectives. Events potentially have a negative impact, a positive impact or a combination of both. Events with a potentially negative impact represent risks. Accordingly, risk is the possibility that an event will occur and adversely affect the achievement of objectives. Events with a potentially positive impact may offset negative impacts or they may represent opportunities

Risk:

Risk is the possibility that an event will occur and adversely affect the achievement of objectives. Further Opportunity is the possibility that an event will occur and positively affect the achievement of objectives. Risks can be thought of in three distinct senses as threats, uncertainty or lost opportunity.

(i) Loss opportunity: The risk that an opportunity is not identified or possibility of something positive not happening — typical examples include not capitalizing on technological advancements and new markets/ geographies

(ii) Uncertainty: The possibility that actual results will not measure up to expectations —typical examples include unfavourable outcomes vis-a-vis budget etc.

(iii) Threats or hazards: The threat of loss or negative things happening—typical examples include system failure, fraud, etc.

4. Risk Management Framework

Effective risk management processes defined as Objective setting, Risk identification, Risk response, Risk assessment, mitigation, monitoring and reporting of risk issues across the organisation. Essential to this process is a well-defined and articulated corporate strategy and business objectives.

The framework will help in creating an environment in which risk management is consistently practiced across the Company and where Management can take informed decisions to reduce the possibility of surprises.

The objective of the Risk Management Framework is to formalise and communicate Company's approach towards management of risk. It will have the following attributes:

(i) Responds to the Management's need for enhanced risk information and improved governance.

(ii) Provides the ability to prioritize, manage and monitor the increasingly complex risks in the business.

(iii) Provides an explicit, comprehensive process to satisfy the regulators, and other stakeholders, that significant risks are being effectively managed.

(iv) Set up the Risk Committee to advise and assist the Board in its oversight of the design and effectiveness of the Enterprise Risk Management Framework.

4.1 Objective Setting

Like every Company, Avanti Finance Private Limited also faces risk from external and internal sources and Objective setting is pre-condition to event identification, risk assessment and risk response. Objectives can be broadly classified in the four categories:

(i) Strategic Objective — Strategic Objective are the high-level goals, aligned with and supporting Company's Mission and Vision statement.

(ii) Operational Objective — Effectiveness and efficiency of entity's operations, including performance and profitability goals and safeguarding resources against loss.

(iii) Compliance Objective — Adherence to relevant laws and regulations.

(iv) Reporting Objective — Reliability of internal and external reporting including financial and non-financial information

4.2 Risk Management Committee

The Risk Management Committee is a committee of Board of the Company. The key responsibilities of the Risk Management Committee relating to risk management include:

(i) To advise and assist the Board in its oversight of the design and effectiveness of the Enterprise Risk Management Framework

(ii) To advise and assist the Board of Directors in fulfilling its oversight responsibilities with regards to the risk appetite of the Company, its risk management and compliance framework and the governance structure that supports it

(iii) Overseeing risk appetite and risk tolerance appropriate to each business area

(iv) Ensuring that there are adequate enterprise-wide processes and systems for identifying and reporting risks and deficiencies, including emerging risks

(v) To ensure alignment of the risk framework with the Company’s growth strategy, supporting a culture of risk taking within sound risk governance

(vi) To monitor all material aspects of the risk profile and to notify the board of any material changes or exceptions to established risk policies

(vii) To ensure the Company’s adherence to all applicable regulations as updated from time to time by various regulatory authorities

4.3 Risk Assessment

Risk prioritization is the process of rating the risks in order to identify those risks which may have the most significant impact on the achievement of the stated goals and objectives of the business

After the key risks have been identified, they will be assessed in terms of their 'Consequence' and 'Likelihood'. Also, in order for risks to be assessed objectively, there must be a common approach or methodology for measuring risks. It is critical for the process owners and management to define and agree on the quantitative and qualitative descriptors (for consequence and likelihood scale) in identifying and assessing risks.

Risks that are characterized with high inherent risks (gross risk in absence of any controls) or high residual risks (risk assessed to be higher than the 'targeted' level after considering existing controls) should be prioritized for treatment.

4.4 Risk Response

Risk response relates to the policies, procedures, processes and controls implemented to address the risks associated with specified future events. The sophistication of the response selected is a factor of the cost versus benefit, including the effect on event likelihood and impact

Various response strategies are available for responding to a given event and associated risks. These strategies are broadly divided into the following four categories:

(i) Avoidance – The Company considers adopting this strategy in circumstances where:

(a) the cost of implementing a response is prohibitive and out-weighs the benefits,

(b) Risk undertaken is well outside the risk appetite or

(c) Activity giving rise to the risk does not fit with the overall strategy.

(ii) Reduction - This strategy can be undertaken by the Company with the intent that if a proposed action is taken, it will reduce likelihood or impact, or both.

(iii) Sharing - By adopting this strategy, the Company attempts to reduce likelihood or impact or both by transferring or otherwise sharing a portion of risk. Common techniques include outsourcing an activity. This strategy is generally resorted to

(a) The cost of implementing a response strategy internally is prohibitive and greatly outweighs its benefits.

(b) The activity giving rise to the risk is not a core competency of the organization e.g.  verification of customer documents submitted during the loan appraisal process.

(c) The cost of sharing the risks is less than the benefits i.e. risk exposure is brought within the risk tolerance by transferring portion of risk.

(iv) Acceptance: No action is taken to affect risk likelihood or impact. This suggests that either the existing residual risk is already in line with risk tolerances or management has accepted the current risk level regardless of whether it exceeds the risk tolerances

4.5 Control Activity

Control activities are the policies and procedures that helps to ensure that management's risk responses are carried out as intended. They serve as mechanism for managing the achievement of objectives.

Control activities exist throughout the organization, at all levels and in all functions. They include a range of activities — as diverse as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets, and segregation of duties.

Control activities are identified with reference to objectives, events & associated risks and response strategies selected. Following may be considered while identifying control activities:

(i) Formal documented policies, procedures, processes and controls to mitigate the likelihood and impact of occurrence of risk for the given event

(ii) Policies, procedures, processes and controls exist but not formally documented

(iii) Existence and effectiveness of the policies, procedures, processes and controls as formally documented.

(iv) Reference to industry global good practices for risks and events identified

(v) Use of experts (e.g., external consultants and Internal Audit) in designing control activities

(vi) Brainstorming and discussions

On identification of control activities against events and associated risks, the existence of same is ascertained to identify additional control activities, if any, required for mitigation of risk.

4.6 Information and communications

Information systems use internally generated data and information from external sources, providing information for managing risks and making informed decisions relative to objectives.

Effective communication should also occur, flowing down, across, and up the organization. All personnel receive a clear message from top management that enterprise risk management (ERM) responsibilities must be taken seriously. They understand their own role in enterprise risk management, as well as how individual activities relate to the work of others. They must have a mean of communicating significant information upstream.

An effective information and communication approach will increase the level of risk management awareness and understanding at all levels across the company

4.7 Monitoring and reporting

Ongoing monitoring occurs in the normal course of management activities. ERM deficiencies are reported upstream, with critical matters reported to top management and the Board.

Monitoring mechanisms will help to:

(i) Ensure consistent application of Risk Management Framework across the Company

(ii) Ensure the effectiveness of the Risk Management policies and procedures

(iii) Identify weaknesses / enhancements and develop corrective action plans

Independent risk management evaluations are periodic reviews of design effectiveness of Risk management framework conducted by Internal Audit. Such reviews focus mainly on following aspects:

(i) Alignment of Risk Management philosophy and principles with respect to Company's vision. Adequacy of measures for developing risk awareness culture within the Company.

(ii) Appropriateness of procedures adopted to implement various Risk Management components.

(iii) Applicability of risk management framework's organizational structure and roles and responsibilities with respect to changes in organization.

Ongoing monitoring of risk management components will be conducted by the Chief Risk & Compliance officer. Such monitoring / validation encompass:

(i) Ensuring alignment of objectives with risk appetite and risk tolerance at all times. Changes, addition or deletion in the corporate/ business division objectives, risk appetite or Risk Management framework, organizational structure should be reviewed to ensure alignment of objectives, risk appetite and risk tolerance.

(ii) Ensuring that new events risks have been documented and the inventory of events is kept current and up-to-date. It is critical to have processes in place to periodically monitor and review the completeness and accuracy of the event inventory.

(iii) Review of risk assessment results to update changes in impact and likelihood of occurrence of any risk. Such changes may arise due to internal or external factors. Ensuring that appropriate communication happens at all levels and at all times.

(iv) Reviewing reports of key business activity indicators, business performance, exceptions, etc.

(v) Understanding of effectiveness for self-performed controls

(vi) Walkthrough testing of controls on a sample basis.

Chief Risk & Compliance officer shall submit a report on updated risk profile and operating effectiveness of the existing controls to senior management.

Based on the report so submitted, senior management will present the assessment of implementation status of the Risk Management framework to the Risk Management Committee.

Key findings/outcome of the Risk Management Committee will be discussed with the Board for taking corrective actions.

5. Limitation of Risk Management

Effective Risk Management Framework provides only reasonable assurance and not absolute assurance to the senior management and the Board of Directors regarding achievement of an entity's objectives. Achievement of objectives is affected by limitations inherent in all management processes, which include:

(i) Human judgment in decision making, which can be faulty and that breakdowns can occur because of such human failures.

(ii) Controls can be circumvented by the collusion of two or more individuals.

(iii) Management's ability to override the risk management decisions.

(iv) Decisions on responding to risk and establishing controls depend on their related costs and benefits.

6. Capital Adequacy Requirement

The Company shall maintain a minimum capital ratio consisting of Tier I and Tier II capital which shall not be less than 15% of its risk weighted assets on-balance sheet and the risk adjusted value of off-balance sheet items or as is regulatorily applicable.

Consequently, Tier I capital cannot be less than 10% unless regulatorily applicable.

Composition of Tier I

“Tier-I Capital" means owned fund as reduced by investment in shares of other NBFCs and in shares, debenture, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group exceeding, in aggregate, 10% of the owned fund.

Composition of Tier II

“Tier II capital” includes the following: -

(a) preference shares other than those which are compulsorily convertible into equity;

(b) revaluation reserves at discounted rate of fifty five percent;

(c) general provisions and loss reserves to the extent these are not attributable to actual diminution in value or identifiable potential loss in any specific asset and are available to meet unexpected losses, to the extent of one and one fourth percent of risk weighted assets;

(d) hybrid debt capital instruments;

(e) subordinated debt; (to the extent, value does not exceed fifty per cent of Tier-I capital); and

(f) Perpetual debt instruments issued by a systemically important non-deposit taking non- banking financial company which is in excess of what qualifies for Tier I Capital, to the extent the aggregate does not exceed Tier I capital.

Explanations:

On balance sheet assets

Degrees of credit risk expressed as percentage weightages shall been assigned to balance sheet assets. Hence, the value of each asset/item requires to be multiplied by the relevant risk weights to arrive at risk adjusted value of assets. The aggregate shall be taken into account for reckoning the minimum capital ratio.

The risk weighted asset shall be calculated as the weighted aggregate of funded items as detailed hereunder: - 

*Approved securities will be based on list as per exchanges

Notes:

(a) Netting may be done only in respect of assets where provisions for depreciation or for bad and doubtful debts have been made. (The provision for bad and doubtful debts will be done by way of creation of a ‘Memorandum Account’ to the extent of same asset value by debiting the P&L account).

(b) Assets which have been deducted from owned fund to arrive at net owned fund shall have a weightage of ‘zero’.

(c) NBFCs were advised vide DNBR (PD) C.C. No. 008/ 03.10.119/ 2016-17 dated September 1, 2016 that in terms of Accounting Standard 22, the tax effects of timing differences are included in the tax expense in the statement of profit and loss as deferred tax assets (DTA) (subject to the consideration of prudence) or as deferred tax liabilities (DTL) in the balance sheet. Further that the balance in DTL account will not be eligible for inclusion in Tier I or Tier II capital for capital adequacy purpose and that DTA being an intangible asset, will be deducted from Tier I Capital. In this connection it is further clarified that

(i) DTL created by debit to opening balance of Revenue Reserves or to Profit and Loss Account for the current year will be included under ‘others’ of “Other Liabilities  and Provisions.”

(ii) DTA created by credit to opening balance of Revenue Reserves or to Profit and Loss account for the current year will be included under item ‘others’ of “Other Assets.”

(iii) Intangible assets and losses in the current period and those brought forward from previous periods will be deducted from Tier I capital.

(iv) DTA computed as under will be deducted from Tier I capital:

(a) DTA associated with accumulated losses; and

(b) The DTA (excluding DTA associated with accumulated losses) net of DTL. Where the DTL is in excess of the DTA (excluding DTA associated with accumulated losses), the excess shall neither be adjusted against item (a) nor added to Tier I capital.”

Off-balance sheet items

(a) General

The Company shall calculate the total risk weighted off-balance sheet credit exposure as the sum of the risk-weighted amount of the market related and non-market related off-balance sheet items. The risk-weighted amount of an off-balance sheet item that gives rise to credit exposure shall be calculated by means of a two-step process:

(i) The notional amount of the transaction shall be converted into a credit equivalent amount, by multiplying the amount by the specified credit conversion factor or by applying the current exposure method; and

(ii) the resulting credit equivalent amount shall be multiplied by the risk weight applicable viz. zero percent for exposure to Central Government/State Governments, 20 percent for exposure to banks and 100 percent for others.

(b) Non-market-related off- balance sheet items

The credit equivalent amount in relation to a non-market related off-balance sheet item shall be determined by multiplying the contracted amount of that particular transaction by the relevant credit conversion factor (CCF).

Note: - Cash margins/deposits shall be deducted before applying the conversion factor.

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7. Reporting of Fraud

The Fraud Risk Management policy lays out in detail the Company’s approach to fraud management including a) assignment of roles and responsibilities with respect to combating fraud, b) defining measures and controls for prevention, early detection, investigation, monitoring, c) recovery and d) timely reporting of incidents of fraud to RBI and Law Enforcement Agencies (LEA)

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8. Asset Liability Management (ALM)

The Asset Liability Management shall be in accordance with relevant and applicable RBI directions including the Master Direction-Reserve Bank of India (Non Banking Financial Company-Scale Based Regulation) Direction, 2023

The Asset Liability Management Committee (ALCO) will assist the Risk Committee in evaluating risks emanating from Asset-liability mismatch, Interest rate risk, various aspects of liquidity risk management such as specifying the appropriate liquidity risk tolerance, internal product pricing, the funding strategy, stress testing and developing contingency plans etc., and other specific matters as may be indicated by the Board of the Company from time to time.

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9. Liquidity Risk Management

The intent of the liquidity risk management framework is to ensure that the Company maintains sufficient liquidity, including a cushion of unencumbered, high quality liquid assets to withstand a range of stress events, including those involving the loss or impairment of both unsecured and secured funding sources.

In addition to the ALCO., the Company will also ensure appropriate internal controls and procedures to ensure adherence to the Liquidity Risk Management framework and a reliable MIS system for providing timely and accurate reporting of the liquidity position of the Company.

The Company will also have procedures to monitor other aspects of liquidity risk management as below:

(A) Maturity Profiling

A maturity ladder and calculation of cumulative surplus or deficit of funds at selected maturity dates can be used for measuring and managing net funding requirements, The Maturity Profile should be used for measuring the future cash flows of the Company in different time buckets. The time buckets shall be distributed as under:

(i) 1 day to 7 days

(ii) 8 days to 14 days

(iii) 15 days to 30/31 days (one month)

(iv) Over one month and upto 2 months

(v) Over two months and upto 3 months

(vi) Over 3 months and upto 6 months

(vii) Over 6 months and upto 1 year

(viii) Over 1 year and upto 3 years

(ix) Over 3 years and upto 5 years

(x) Over 5 years

Within each time bucket, there could be mismatches depending on cash inflows and outflows. While the mismatches up to one year would be relevant since these provide early warning signals of impending liquidity problems, the main focus shall be on the short-term mismatches, viz., 1-30/ 31 days. The net cumulative negative mismatches in the Statement of Structural Liquidity in the maturity buckets 1-7 days, 8-14 days, and 15-30 days shall not exceed 10 percent, 10 percent and 20 percent of the cumulative cash outflows in the respective time buckets. NBFCs, however, are expected to monitor their cumulative mismatches (running total) across all other time buckets upto 1 year by establishing internal prudential limits with the approval of the Board. NBFCs shall also adopt the above cumulative mismatch limits for their structural liquidity statement for consolidated operations.

In order to enable the NBFCs to monitor their short-term liquidity on a dynamic basis over a time horizon spanning from 1 day to 6 months, NBFCs shall estimate their short-term liquidity profiles on the basis of business projections and other commitments for planning purposes.

(B) Liquidity Risk Measurement – Stock Approach

The Company should monitor certain critical ratios and specify some internal limits for these ratios based on the Company’s liquidity risk management capabilities, experience and profile. An indicative list of critical ratios are as below:

(i) Short-term liability to total assets

(ii) Short-term liability to long term assets

(iii) Commercial papers to total assets

(iv) Short-term liabilities to total liabilities

(v) Long-term assets to total assets

(C) Currency Risk

The Board of the Company should recognise the liquidity risk arising out of exchange rate volatility affecting exposures to foreign assets or liabilities and develop suitable preparedness for managing the risk.

(D) Interest Rate Risk (IRR)

Company should measure the Gap or Mismatch risk by calculating Gaps over different time intervals as at a given date. Gap analysis measures mismatches between rate sensitive liabilities and rate sensitive assets (including off-balance sheet positions). An asset or liability is normally classified as rate sensitive if:

(i) within the time interval under consideration, there is a cash flow;

(ii) the interest rate resets/re-prices contractually during the interval;

(iii) dependent on RBI changes in the interest rates/Bank Rate;

(iv) it is contractually pre-payable or withdrawal before the stated maturities.

The Gap Report shall be generated by grouping rate sensitive liabilities, assets and off- balance sheet positions into time buckets according to residual maturity or next repricing period, whichever is earlier.

 The gaps shall be identified in the following buckets:

(i) 1 day to 7 days

(ii) days to 14 days

(iii) 15 days to 30/31 days (one month)

(iv) Over one month to 2 months

(v) Over two months to 3 months

(vi) Over 3 months to 6 months

(vii) Over 6 months to 1 year

(viii) Over 1 year to 3 years

(ix) Over 3 years to 5 years

(x) Over 5 years

(xi) Non-sensitive

(E) Public disclosure on liquidity risk

(i) Funding Concentration based on significant counterparty (both deposits and borrowings)

(ii) Top 20 large deposits (amount in ₹ crore and % of total deposits)

(iii) Top 10 borrowings (amount in ₹ crore and % of total borrowings)

(iv) Funding Concentration based on significant instrument/product

(v) Stock Ratios:

1. Commercial papers as a % of total public funds, total liabilities and total assets
2. Non-convertible debentures (original maturity of less than one year) as a % of total public funds, total liabilities and total assets
3. Other short-term liabilities, if any as a % of total public funds, total liabilities and total assets
4. Institutional set-up for liquidity risk management

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10. IT Governance, Risk & Controls

Effective risk identification and management underpins and forms the foundation of the information security management system. The Risk Assessment process suggested follows the guidelines offered in ISO 31000:2018 and ISO 27001:2022.

Risk Assessment shall be carried out by an objective assessment of the Assets, Vulnerabilities to the Assets, Threats that could exploit these Vulnerabilities and the probability with which the threat could be manifest. The risks derived through this process should be quantified using a relative scale grading based on the likelihood of occurrence and its potential impact, guiding the development of a risk treatment plan that includes avoidance, reduction, acceptance, or transfer of risks. Security Controls should be applied to reduce these risks and these controls and their implementation monitored for measuring the effectiveness.

Risk Assessment should be conducted at least once a year or as and when required by the Company to continually improve the IS posture. These may be termed as planned reviews and will be carried out at predetermined frequencies. Reviews may also be event driven for e.g. a virus attack on the network or change in policies etc.

Information security management system related risks are recorded in the risk register and reviewed atleast annually by the Information Technology Steering Committee and the Information Technology Strategy Committee.

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11. Sensitive Sector Exposure

As per the Master Direction-Reserve Bank of India (Non-Banking Financial Company-Scale Based Regulation) Direction, 2023, NBFCs shall consider exposure to the capital market (both direct and indirect) and commercial real estate as sensitive exposures (SSE). As part of the business operations, the Company will not have any exposure to the capital market or the commercial real estate sector.

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12. Adherence to Applicable Regulations

The Company should incorporate appropriate processes to ensure that it is abreast of applicable changes in regulation as updated by various regulatory authorities from time to time and necessary changes are made to the operational processes to ensure compliance to the latest regulations.

The Risk Committee will monitor the Company’s adherence to the latest regulations as part of the periodic review of the Company’s risk management practices.

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13. Regulatory Reference

This policy is framed as per the following regulatory references (where applicable) and in accordance with leading industry practice:

1. Section 134 of Companies Act, 2013 (Refer Para 2 to 5 of this policy)
2. Master Direction-Reserve Bank of India (Non-Banking Financial Company-Scale Based Regulation) Direction, 2023

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14. Policy Review and Updates

This document shall be approved by the Risk Management Committee and the Board and shall be reviewed at least annually.

This revised Policy comes into effect from date of approval of the Board.

Approved by the Board of Directors on April 03, 2020

Relief measures approved by the Board

Retail loans of INR 54.84 crores (23791 accounts) outstanding as on March 31'20

• 1.  All borrowers will be given the option of a moratorium for EMI falling due between the period March 01, 2020 to May 31, 2020 (upto 92 days) without a change in the EMI amount.
• 2.  All borrowers will be given an option to continue making repayments falling due between the moratorium period in case their cash flows permit & they are not in favour of extending their loan tenure & paying additional accrued interest for the moratorium period.
• 3.  Interest will continue to accrue on the outstanding portion of the term loans during the moratorium period and will be collected along with the last EMI or additional installment.
• 4.  The revised asset classification of the loans will be on the basis of revised due dates and the revised repayment schedule. The same will be shared with the Credit Information Companies (Regulatory requirement).

Institutional loans of INR 12.14 crores (10 accounts) outstanding as on March 31'20

All institutional borrowers will be provided an option to opt for moratorium. However, decision pertaining to grant of moratorium will be solely made by Avanti, on a case to case basis.

Repayment Moratorium 2 Policy of Avanti Finance Private Limited

This is with reference to the circular issued by the Reserve Bank of India on the subject of COVID 19 regulatory package pertaining to grant of moratorium to borrowers. The Board of each financial institution has to approve its own policy & your approval is therefore sought for Avanti Finance Pvt Ltd. Our policy is aimed at adhering to the spirit & letter of the RBI's guidelines & enabling the right choice for our borrowers.

The gist of the guidelines is as under:

• 1.  RBI has released a comprehensive Statement of Development and Regulatory Policies onMarch 27, 2020 covering the Covid-19 package.
• 2.  All term loans were permitted to be granted a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020 (Moratorium 1) by the Board on April 3, 2020.
• 3.  Further, through a media statement by the Governor, the moratorium was extended by another three months from June 1, 2020 to August 31, 2020 (Moratorium 2).
• 4.  The repayment schedule for such loans can be shifted across the board by a total of six months after the moratorium period (M1 and M2).
• 5.  Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.
• 6.  The asset classification of term loans which are granted relief as per point 2 and point 3 shall be determined on the basis of revised due dates and the revised repayment schedule.
• 7.  The rescheduling of payments, including interest, will not qualify as a default for the purposes of supervisory reporting and reporting to Credit Information Companies (CICs) by the lending institutions.
• 8.  This is applicable to all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies).

On account of the disruption in incomes of our customers due to the impact of Covid-19, the Board, on April 3, 2020, had approved to provide Moratorium 1 to all our customers.

Given that the situation on ground remains similar with continued lockdowns at local levels, our customers livelihoods still remain affected. Hence, we propose to extend Moratorium 2 across the board to all standard accounts as per the RBI guidelines and repayments will start w.e.f September 01, 2020 (as per the original EMI dates of the month).

We request approval of the Board for the following measures for effective implementation of the above mentioned guidelines.

Retail loans / balances are Rs 51.78 crs (23372 accounts) outstanding as of June 1, 2020

• 1.  All borrowers will be given the option of a moratorium for EMI falling due between the period June 01, 2020 to August 31, 2020 (upto 92 days) without a change in the EMI amount
• 2.  All borrowers will be given an option to continue making repayments falling due between the moratorium period in case their cash flows permit & they are not in favour of extending their loan tenure & paying additional accrued interest for the moratorium period.
• 3.  Interest will continue to accrue on the outstanding portion of the term loans during the moratorium period and will be collected along with the last EMI or additional installment.
• 4.  The revised asset classification of the loans will be on the basis of revised due dates and the revised repayment schedule. The same will be shared with the Credit Information Companies (Regulatory requirement).

Institutional loans of INR 9.70 crores (12 accounts) outstanding as on June 1, 2020

All institutional borrowers will be provided an option to opt for moratorium. However, decision pertaining to grant of moratorium will be solely made by Avanti, on a case to case basis.

Outsourcing Policy

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Information Security Policy

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Anti Child Labour And Forced Labour Policy

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1. INTRODUCTION

1.1 Avanti Finance Private Limited (hereinafter referred to as “the Company” or “we”), a NonBanking Financial Company (“NBFC”) registered with the Reserve Bank of India, is deeply committed to improving and strengthening the economic status of disadvantaged communities by rendering financial support through its products and services for small businesses across sectors.

1.2 The protection of human rights and fundamental freedoms is a top priority for the Company - a commitment which is codified and enforced through the Company's own Code of Conduct(accessible at: https://avantifinance.in/policies/ (“Code”) and its Environment and Social Governance Policy) (“ESG Policy”).

1.3 The Company acknowledges and condemns the unfortunate and disturbing reality of globaltrade and business, where many vulnerable children and adults, denied of their basic rights and opportunities, are exploited as labour due to ignorance, poverty, irregular income streams for family, economic shocks, lack of access to social security, education, health facilities, food security etc.

1.4 The Company does not engage in or tolerate any forms of child labour or forced labour.  Through this Child Labour and Forced Labour Policy (“Policy”), the Company affirms its commitment to eliminate child labour and forced labour from all its business-to-business (“B2B”) relationships at the institutional level i.e., with another company or a self-help group or trust or society to whom we extend institutional loans (hereinafter referred to as “Institutional Entities”).

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2. OBJECTIVES OF POLICY

2.1 This Policy has been designed to:

a) codify a prohibition of both child labour and forced labour;

b) provide an operative framework for addressing instances where child labour or forced labour is identified; and

c) lay down strategies for its prevention.

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3. RELATIONSHIP BETWEEN POLICY AND THE COMPANY’S ESG

3.1 The Company is committed to compliance with its ESG Policy which sets out the guidelines for environmental stewardship, social risk due diligence and mitigation based on internationally recognised standards.

3.2 The purpose of this Policy is to address the issue of child labour and forced labour with greater depth and rigour than in the ESG Policy. This Policy provides the background information and is to be read and operationalised in conjunction with the ESG Policy.

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4. SCOPE

4.1 This Policy applies to Company’s dealings at the B2B level while lending to Institutional Entities. The Company expects Institutional Entities to internalise similar standards to address instances of child and forced labour in the conduct of their business.

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5. CHILD LABOUR

5.1 Child Labour defined

5.1.1. Child Labour is all work that deprives children of their childhood, their potential and their dignity and is harmful to their physical and mental development. In keeping with the International Labour Organisation (“ILO”) standards, the Company defines child labour as:

1. Work that is mentally, physically, socially or morally dangerous and harmful;
2. Work that fails to take into account compulsory schooling;
3. Work that prevents children from attending school;
4. Work that makes it necessary for children to leave school prematurely; or
5. Work that requires children to combine school attendance with long and heavy work.

5.1.2. The worst forms of child labour involve enslavement, separation of children from their families and exposure to hazardous conditions.

5.2 Distinction based on Hazardous Work

Under applicable Indian law, engagement of child labour and/or adolescent labour in hazardous occupations or processes is banned. Accordingly, Company will not tolerate and/or encourage such engagement under any circumstances.

5.3 Distinction between Child Labour and Young Worker

5.3.1  In keeping with Indian law and internationally recognised standards, the Company makes a distinction between child labour and young workers or adolescents.

5.3.2  Applicable law in India defines an ‘adolescent’ to be a person between the ages of 14 (fourteen) to 18 (eighteen) years and permits employment of adolescent labour except in certain specified hazardous processes or occupations such as mines, inflammable substances, coal industries and such other occupations as may be notified under the applicable law. In keeping with ILO Convention 138, the Company is of the view that employment of children who are under 15 years of age and have not completed compulsory schooling shall not be allowed to work.

5.3.3  At the outset, it is pertinent to clarify that the Company only employs qualified and specialised professionals for undertaking the work as an NBFC, therefore, the question of employing children or adolescents does not arise. However, this may not be the case with many other stakeholders and partners across the Company’s value chain, particularly those at the grassroot level involved in mobilising the poor and vulnerable communities or seeking financial support from the Company for their small businesses. Further under Indian law, adolescents are permitted to work in occupations or processes that are demonstrably non-hazardous in nature. Accordingly, Company may engage with stakeholder that employs or engages adolescents in such non-hazardous occupations / processes. However, such stakeholder engagement should be undertaken upon prior assessment of the nature of the activities employing / engaging adolescents on a case to case basis.

5.4 Prohibition of Child Labour

5.4.1. The Company is an ethically driven organisation that accepts the responsibility for setting standards for itself and Institutional Entities to achieve the minimum level of protection available asper applicable law. The ESG Policy provides the basis for all B2Bcollaboration, wherein Institutional Entities are expected to adhere to similar standards in the conduct of their business or operations. Accordingly:

a. the minimum age for recruitment for all levels of employees at the Company shall be 18years and above.

b. in exceptional circumstances and in accordance with applicable law and subject to Clause 5.3.3 above, the Company may permit Institutional Entities to employ adolescents or young workers.

The Company will implement reliable control mechanisms at the level of hiring procedures to prevent child labour. Accordingly, the Company will require that Institutional Entities also put in place similar effective controls. In relation to the same, Institutional Entities shall be required to provide a self-declaration in the format as provided in Annexure A of this Policy.

5.5 Addressing instances of Child Labour

5.5.1  If there are any cases of violation concerning issues related to child labour, such cases shall be investigated, and suitable remedial action shall be initiated including in accordance with applicable law. In order to ensure the well-being of the child in such cases, the Company will require compliance with the minimum conditions set forth below:

a. The child must cease work immediately.  

b. The employer must provide the child with appropriate compensation for the loss of employment.  

c. The employer must safeguard and promote the welfare of the child, which will include, for example, verification of continuation of compulsory schooling and financial assistance for the family of the respective child.

5.5.2  The Company shall strive to put in place mechanisms to monitor the implementation of these measures in its dealings with Institutional Entities which would be tailored in reference to the type of financial product being availed and the industrial sector in which the Institutional Entity operates. For example, Institutional Entities may be required to provide Company with a

declaration confirming their compliance with the norms against child labour in the format as mentioned in Annexure A of this Policy to be obtained during onboarding and at the time of annual renewal.

5.5.3  The Company reserves the right to verify on site the implementation of such actions by Institutional Entities, as necessary. Appropriate obligations underscoring this requirement shall be incorporated in Company’s agreements with Institutional Entities. In the event any Institutional Entity refuses to cooperate and/or fails to remedy the situation, the Company reserves the right to terminate the business relationship as a last resort.

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6. FORCED LABOUR

6.1 Forced Labour defined

In line with international standards set by ILO, the Company understands forced labour to beany work or service, which is performed involuntarily under threat of penalty. The Company will not tolerate or condone any form of forced labour, bonded labour, modern slavery or human trafficking (collectively referred to as “forced labour”).

6.2 Prohibition of Forced Labour

6.2.1  Through compliance with the Code, the ESG Policy and Bonded Labour System (Abolition) Act,

1976 (“BLSA”), the Company takes a firm and active stand against all forms of forced labour.

6.2.2  The Company prohibits the use of forced labour and expects the same of the Institutional Entities. The freedom of workers may not be restricted and must be ensured at all times. At the minimum, the following standards must be complied with:

6.2.1  In the event any Institutional Entity refuses to cooperate and/or fails to remedy the situation, the Company reserves the right to terminate the business relationship as a last resort.

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7. POINT OF CONTACT FOR ISSUES INVOLVING CHILDLABOUR AND FORCED LABOUR

7.1     Any questions on this Policy or on the subject of child labour and forced labour ingeneral may be directed to the Chief Risk Officer of the Company. Chief Risk Officer shall be responsible for the implementation of the Policy.

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8. POLICY REVIEW ANDUPDATES  

This document shall be reviewed by the COO, and shall be reviewed at least once a year.  Reviews shall also account for any significant business changes and/or any regulatory requirements.

This Policy was:

I. Drafted on behalf of the Company by: Mr Nagaraj Subrahmanya, CRO

II. Internally reviewed by: Mr Manish Thakkar, COO

III. Approved bythe Board of the Company on: February 03, 2021, Revision 1 on: October 31, 2023,Revision 3 on: December 19, 2024

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Annexure A

(To be on the letterhead of the Institutional Entity)

Ref: [•]

Date: [•]  

To:

Avanti Finance Private Limited  

#2727, 2nd Floor,

1st Main Road, HAL3rd Stage,

Ward No. 58 (OldNo. 83),

New Thippasandra, Bangalore,

Bangalore North, Karnataka, India, 560075

Sub: Declaration in relation to required compliances for the purposes of availing loan from Avanti Finance Private Limited.

Dear Sir's

Please refer to loan application dated wherein we seek to avail a loan of amount (“Loan”). In pursuance of the same, and as required by Avanti Finance Private Limited, we hereby declare the following statements to be true and correct:

1. Before grant of employment, we verify the age of the applicants by requiring them to present valid identification issued by Central Government, State Government or other relevant authority prior to employment. Such documents may include birth certificates, school records, etc.;

2. At the time of grant of employment, we have retained a copy of such verified documents in the personnel file of the employee for the entire period of employment; and

3. Under no circumstances shall any adolescent/young worker’s school, work, and transportation time exceed a combined total of 10 hours per day, and in no case shall young workers work more than 8 hours a day. Young workers or adolescents may not work during night hours and shall be entitled to all benefits and pay on the principle of ‘equal pay for equal work’ as an adult worker.

We understand and agree that if at any point of time any of the statements above that are represented to be true becomes untrue during the period the Loan remains outstanding, Avanti Finance Private Limited shall be entitled to terminate the Loan Agreement and immediately recall the loan amount.

Yours faithfully,

For [Insert Name of Institutional Entity]

Authorised Signatory

Environment and Social Governance Policy

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1. SCOPE AND PURPOSE OF THIS POLICY

1.1 In this Environment and Social Governance Policy (“ESG Policy”), “we” or “us” or “our” means Avanti Finance Private Limited (“Company”), and includes its executive directors, officers, employees , as the context may require.

1.2 Please refer to our Code of Conduct (accessible at: <https://www.avantifinance.in/policies#avanti-finance-code-of-conduct-policy> ) (“Code”), where we have outlined our broad commitment to upholding certain environment and social standards as responsible individuals as well as a responsible corporate person. This includes the commitment to (i) integrate environmental and social principles in our business; (ii) engage with the community and other stakeholders to minimise adverse impact on environment; and (iii) prevent the wasteful use of natural resources particularly with regard to the emission of greenhouse gases, consumption of water and energy, and the management of waste and hazardous materials.

1.3 This ESG Policy has been framed and adopted by us in line with our commitments under the Code and applies to all our business-to-business (“B2B”) relationships at the institutional level i.e., with another company or a self-help group or trust or society to whom we extend institutional loans (hereinafter referred to as “Institutional Entities”). This ESG Policy delineates various measures that we shall endeavour to take in operationalising our commitment.

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2. IDENTIFICATION OF ENVIRONMENTAL AND SOCIAL RISKS

2.1 Environmental and social risks (“ES risks”) can be understood as given below:

2.1.1 Environmental risks may include:

(i) Pollution (for example: contamination of air, land or water);

(ii) Deforestation;

(iii) Loss of biodiversity and natural habitats;

(iv) Greenhouse gas emissions and climate change impacts; and/or

(v) Depletion of natural resources.

2.1.2 Social risks may include:

(i) Child labour;

(ii) Occupational health and safety;

(iii) Working conditions;

(iv) Potential threats to livelihood of indigenous communities;

(v) Forced and compulsory labour; and/or

(vi) Community health, safety and security.

2.2 Key Performance Indicators (KPIs) adopted by Company for ES risks are provided below:

2.2.1 KPIs for environmental risks:

(i) Energy Consumption: The Company monitors the usage of the energy in its office spaces and focuses on minimizing its energy footprint. Company invests in energy efficient appliances, lighting, office utilities and other renewable sources to promote sustainability.

(ii) Waste Management: Company manages its waste reduction, ensure proper disposal and is constantly driving towards zero-waste. As part of this effort, Company also seeks to become 100% paperless and moving towards digitizing documents with its partners, borrowers and other stakeholders to minimize environmental impact.

(iii) Biodiversity Preservation: On a consistent basis, Company organizes plantation drives, and workshops to educate its employees on the imprtance of biodiversity and environmental preservation, fostering awareness and active participation in ecological conservation.

2.2.2 KPIs for social risks:

(i) Diversity and Inclusion: Company values diversity in the workplace and strives to create an inclusive environment where all employees, regardless of background, can thrive. It fosters equal opportunities and encourages representation across various demographic groups.

(ii) Health and Safety Measures: Company is committed to maintaining high safety standards, reducing workplace hazards, and promoting the well-being of employees through proactive health and safety initiatives.

(iii) Training and Development: Company invests in the continuous growth and professional development of its employees. Through regular training programs and workshops, Company equips its taskforce with the necessary skills and knowledge to contribute effectively to the Company.

(iv) Community Engagement: Company encourages its employees to participate in team-bonding activities, exchange opinions and foster positive relationships.

2.3 Please refer to our risk management policy (“Risk Management Policy”), which outlines the framework to identify various risks and manage them in line with the objectives of the Company (Strategic, Operations, Compliance and Reporting). In this respect, we acknowledge and understand that ES risks may also contribute as factors of risk and may affect all or any of the objectives of the Company. Accordingly, we strive to put in place a mechanism to identify, assess and respond to ES risks in our B2B relationships with Institutional Entities in accordance with our established framework as mentioned in this Policy.

2.4 Such mechanism shall be designed with due regard including to:

(i) Our business model;

(ii) Types of financial services offered by us (taking into account the duration, amounts involved; the purpose of the seeking finance, and the corporate value chain of the Institutional Entity);

(iii) Industry sectors of our portfolio and that of Institutional Entity;

(iv) Types of ES risks related to the portfolio and the potential to cause adverse impacts;

(v) Specific geographic extent of applicant’s proposed business activities;

(vi) Applicable industry initiatives and legal frameworks; and/or

(vii) Cultural aspects (internal and external).

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3. ROLES AND RESPONSIBILITIES

3.1 Please refer to our Risk Management Policy (“Risk Policy”), which lays down the governance structure in relation to risk management and assigns certain tasks inter alia for assessment, management, reporting and implementation of risks to a specific department of the Company (“Risk Management Committee”).

3.2 Accordingly, the Risk Management Committee of the Company shall be responsible for evolving appropriate parameters for ES risk identification, assessment, and mitigation strategies in line with this ESG Policy. The Risk Management Committee is composed of elected or nominated Board members, CEO of the Company, heads of various verticals including Chief Risk Officer as well as other personnel as required and ratified by the Board.

3.3 Some of the key factors for consideration of the Risk Management Committee in this regard include:

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3.4 Risk Management Committee shall undertake an annual internal assessment of the responsiveness of this ESG Policy with reference to relevant sectors in which Company undertakes its financial activities.

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4. GOVERNING PRINCIPLES

4.1 We recognise that social and environment factors have a direct bearing on the growth of our Company and the society at large. Accordingly, Company will conduct its business and operations in compliance with all relevant and applicable laws in the country including those concerning the environment, labour, occupational health, and safety regulations.

4.2 Through our financing activities with Institutional Entities, we undertake to pay specific attention to supporting sustainable livelihoods; inclusive and equitable human development; and social development.

4.3 The ES risk assessment of and by Institutional Entities shall be based on the type of product and services deployed by us. For example, the B2B risk assessment shall be sector-specific and customised to suit agricultural loans, project finance and equity transactions, MSME lending and transactions in sensitive sectors like mining, power, oil and gas etc.

4.4 We recognise that environment health and safety is an important and integral component of the broader ESG Policy. We are committed to providing a safe and healthy working environment and comply with all regulations for the preservation of the environment. We shall strive for a safe and healthy environment that shall be free from occupational injury and disease. We shall also pursue high standards of safety, health and environmental management as an integral part of efficient management of our business.

4.5 We recognise that we are in a unique position to actively engage with our various stakeholders including our employees, partners and vendors to develop their needs, interests and expectations and align these with the broader environmental and social concerns associated with their activities. We shall endeavour to communicate and disseminate this ESG Policy including the due diligence process as recommended below to all partner Institutional Entities.

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5. ES DUE DILIGENCE FRAMEWORK

5.1 This ESG Policy has been designed to guide us in adhering to environmental, social, and governance norms consistent with the values of Company as referenced in the Code. Accordingly, we shall strive to integrate our risk assessment framework with specific ES risk identification and mitigation measures in our dealings with Institutional Entities. The responsibility to carry out such measures will rest on the Partnerships Team or such other team that is put in place for the same.

5.2 We may choose to interact directly with the Institutional Entity or through our partners. The term “partner” in this ESG Policy means and includes our authorised representatives and/or third-party agents appointed by us for assistance in undertaking our business activities with Institutional Entities. Accordingly, we shall strive to leverage the use of our partners to monitor in general the application of our internal assessment framework.

5.3 Partner shall procure a self-declaration from the Institutional Entities in the format as provided under Annexure A of this Policy and provide confirmation to the effect that the Institutional Entity is not engaged in activities that violate applicable laws pertaining to the environment.

5.4 The Partnerships Team shall conduct due diligence on the following aspects:

5.4.1 Applicant Diligence: Prospective Institutional Entities who seek to avail the financial products offered by us shall be screened to ensure that they are not found to be grossly non-compliant with our ESG Policy, relevant national and state-specific laws and such other regulations as may be applicable in the instant case.

5.4.2 Loan Application: Scrutinise every loan application received from our existing and/or prospective Institutional Entities to identify environment, social or labour risk. This shall be in addition to the principles that are more specifically outlined in our Credit Risk Policy.

5.4.3 Purpose of Loan: It shall ensure that the end-use of our loan products to such Institutional Entities does not conflict with any relevant and applicable laws in India concerning environmental, occupational health and safety regulations. In particular, we shall strive to work with our field partners and help them report to us in case the loan availed from us is being used for non-compliant purposes. In such cases, Company shall be entitled to, subject to the loan agreement with the Institutional Entity, cancel or recall the loan and apply any proceeds to mitigate any proven damage to the environment.

5.4.4 Loan Agreements: In case its assessment points towards specific ES risks in respect of a particular Institutional Entity or a class of Institutional Entities, the Partnerships Team shall ensure that the respective loan agreements enumerate relevant clauses on applicable environmental and/or labour laws whereby obligations to mitigate such risks is made part of the loan agreement.

5.4.5 Partner / Vendor Diligence: At the stage of onboarding, Partnerships Team will verify that the proposed partner is not grossly non-compliant with our ESG Policy, relevant national and state-specific laws, social and labour laws, and such other regulations as may be applicable in the instant case.

5.4.6 Partner / Vendor Agreements: We shall ensure that our agreements with partners shall enumerate relevant clauses on applicable environmental and/or labour laws.

5.5 Monitoring and Reporting: To the extent reasonably possible, we shall require our partners to assess whether the spirit of this ESG Policy is being observed. Such assessment may take several forms including documenting pre-disbursal undertakings from the Institutional Entities; post-disbursal inspection of relevant premises or locations to ascertain that any financing availed from us continues to be deployed for activities in line with this ESG Policy; and preparing periodic reports of these and other ancillary matters for our further review.

5.6 Exclusion List: Company shall not knowingly lend or offer any financial products to applicants engaged in the following activities:

(i) Production or trade in any product or activity deemed illegal under host country laws or regulations or/and international conventions and agreements, including production or trade in pharmaceuticals, pesticides / herbicides and ozone-depleting substances , subject to international phase-out or ban.

(ii) Production or activities involving harmful or exploitative forms of forced labour  / harmful child labour .

(iii) Production or trade of equipment (including, but not limited to, nuclear products, weapons and munitions), designed or designated for military purpose.

(iv) Any business relating to pornography or prostitution.

(v) Any entity that has been subject to corruption, bribery or money laundering, unless there is a proof of a structural change within the entity leading to fundamental behavioural changes.

(vi) Any entity for whom it is the main activity, i.e. more than 5% of total revenue, or any financial institution with more than 5% of gross loan portfolio or 5% of deposits (all below-mentioned sectors cumulated) in production or wholesale trade of the following:

(a) Distilled alcoholic beverages;

(b) Tobacco;

(c) Gambling, casinos and equivalent enterprises;

(d) Mining and mineral processing;

(e) Trade in wildlife or wildlife products regulated under CITES  or sourced from areas with prevalent risk of illegalities as regards trade in wildlife or wildlife products.

(vii) Production or activities that impinge on the lands owned, or claimed under adjudication, by indigenous peoples, without fully documented consent of such peoples.

(viii) Significant conversion or degradation  of Critical Habitat .

(ix) Racist and anti- democratic media.

(x) Alteration, damage or removal of any critical cultural heritage .

(xi) Engaged in controversial fishing techniques (such as trawls, drifts nets, shark-finning, ghost fishing, disrespecting no-take zones, methods destroying or damaging seafloor habitats where fishes and other seafloor animals reside, and methods known to catch large amounts of bycatch).

(xii) Commercial logging operations or the purchase of logging equipment for use in a natural forest.

(xiii) Production or trade in wood or other forestry products from primary forests, unless they are certified by one of the four main certification schemes .

(xiv) GMO related activities in any link of the agricultural value chain if these activities exceed 5% of total revenue, unless:

(a) In the market where the projects operate there is no viable alternative (e.g. in markets where only GMO seeds are available);

(b) Large groups or communities derive their livelihood from GMO-related agriculture.

(xv) Production or trade in nuclear power and radioactive materials .

(xvi) Production or trade in or use of unbounded asbestos fibers.

(xvii) Production or trade in products containing PCBs .

(xviii) Production, trade, storage, or transport of significant volumes of hazardous chemicals, or commercial-scale usage of hazardous chemicals.

(xix) Cross-border trade in waste and waste products unless compliant with the relevant international agreements on trade in chemicals and chemical waste  and the underlying regulations.

(xx) Finance or engage in any activity, production, use, distribution, business or trade involving:

(a) coal prospection, exploration, mining or processing;

(b) oil exploration or production;

(c) standalone fossil gas exploration and/or production ;

(d) transportation or and related infrastructure primarily  used for coal for power generation;

(e) crude oil pipelines;

(f) oil refineries;

(g) construction of new or refurbishment of any existing coal-fired power plant (including dual);

(h) construction of new or refurbishment of any existing HFO-only or diesel-only power plant producing energy for the public grid and leading to an increase of absolute CO2 emissions ;

(i) expansion of its infrastructure for the captive use of coal  used for power and/or heat generation.

5.7 Disposal of E-Waste: We are a financial institution that seeks to foster sustainability at scale through efficient finance. Towards this purpose, we strive towards a `less paper’ approach by employing a host of digital instruments and infrastructure to reduce the carbon footprint. At the same time, we acknowledge that more technology may also mean electronic waste which is generated when instruments and infrastructure become unfit for their originally intended use (“E-Waste”). Phones, tablets, computers, servers, mainframes, printers, scanners, copiers, calculators, and air conditioners are examples of E-Waste. To ensure proper disposal of such E-Waste, we shall adhere to the following:

(i) Dispose E-Waste as per E-waste (Management) Rules, 2022 and/or such other applicable laws;

(ii) Use the services of entities involved in E-Waste exchange; or

(iii) Make charitable donation to such social welfare institutions as deemed fit by Company.

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6. COMPLAINT REDRESSAL MECHANISM

6.1 It is the Company’s constant endeavour to put the interest of our stakeholders’ interest first and to provide with financial solutions that are right for them. In keeping with its promise, the Company looks forward to receiving both positive and negative feedback from the stakeholders on its products and services.

6.2 The grievances of the stakeholders will be redressed in the manner provided below:

(i) Stakeholders can register grievances through email id and toll-free number provided at the Company’s branches / Head Office / website and at any other place where the business of the Company is transacted.

(ii) After examining the matter, the Company will endeavour to send the stakeholder its response expeditiously and intimate the stakeholder how to escalate the complaint to higher level, if they are not satisfied with the response.

(iii) Stakeholders have to confirm whether the grievance has been resolved to their satisfaction or not. The grievance will be deemed to be closed, if Stakeholders do not respond via toll free number or email.

(iv) The Company shall also request the stakeholder to provide feedback on the services rendered. This can be done through direct contact by staff or through specific stakeholder satisfaction surveys that may be conducted from time to time.

(v) A periodical review of the above mechanism at various levels of management would be undertaken by the Company.

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7. POLICY REVIEW AND UPDATES

The implementation of ESG Policy shall be monitored and reviewed periodically by the Board of the Company.

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Annexure A

(To be provided on the letterhead of the Institutional Entity)

Ref: [•]

Date: [•]  

To:

Avanti Finance Private Limited #2727, 2nd Floor,

1st Main Road, HAL 3rd Stage,

Ward No. 58 (Old No. 83),

New Thippasandra, Bangalore,

Bangalore North, Karnataka, India, 560075

Sub: Declaration in relation to required compliances for the purposes of availing loan from Avanti Finance Private Limited.

Dear Sir's

Please refer to loan application dated_____wherein we seek to avail a loan of amount

_____(“Loan”). In pursuance of the same, and as required by Avanti Finance Private Limited, we hereby declare the following statements to be true and correct:

1. We are in material compliance with all applicable laws in relation to the environment, health and safety;

2. We have obtained all applicable consents, approvals, authorisations including applicable No- Objection Certificates from relevant Central, State and local authorities with respect to air emissions, discharges to surface water or ground water, noise emissions, solid or liquid waste disposal, the use, generation, storage, transportation, or disposal of toxic or hazardous substances or wastes, or other environment, health and safety matters; and

3. We have received no complaint or claim from any person or third-party seeking damages, indemnification, cost recovery, compensation, or injunctive relief in respect of the above matters.

We understand and agree that if at any point of time any of the statements above that are represented to be true becomes untrue during the period the Loan remains outstanding, Avanti Finance Private Limited shall be entitled to terminate the Loan Agreement and immediately recall the loan amount.

Yours faithfully,

For [Insert Name of Institutional Entity]

Authorised Signatory

Charter for Information Security Committee

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Fraud Risk Management Policy

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KYC / AML Policy

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Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information

1. Purpose and Applicability

Avanti Finance Private Limited (“Company”) is committed in maintaining the highest standards of integrity, transparency, and compliance with applicable securities laws. This Policy is designed to prevent unlawful trading of the Company’s securities based on material, non-public information and to protect the reputation of the Company and its employees.

Regulation 8 read with Schedule A of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 as amended from time to time (“Regulations”) mandates formulation of a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (“Code”).

This Code shall apply in relation to disclosure of Unpublished Price Sensitive Information (“UPSI”) by the Company. The scope, exceptions as given in the Regulations shall be applicable for the purpose of this Code as well.

The words and expressions used but not defined herein shall have the meanings as ascribed to them under the Regulations.

2. Objective

This Code has the following objectives:

a)  Practices and procedures to follow in relation to dissemination and  disclosure of UPSI; and

b) Sharing of UPSI for legitimate purposes

3. Chief Investor Relations Officer

The Company shall designate a senior officer as a Chief Investor Relations Officer (“CIRO”) for dealing with dissemination of information and disclosure of UPSI in a fair and unbiased manner.

For the said purpose, the Chief Compliance Officer of the Company will be the CIRO for the purpose of this Code.

The CIRO would be responsible to ensure timely, adequate, uniform and universal dissemination and disclosure of UPSI pursuant to this Code as required under the Regulations so as to avoid selective disclosure.

4. Principles of Fair Disclosure

The following principles of fair disclosure for the purpose of the Code will be strictly adhered to –

a) Prompt public disclosure of UPSI that would impact price discovery no sooner than credible and concrete information comes into being, in order to make such information generally available.

b) Uniform and universal dissemination of UPSI information to avoid selective disclosure.

c) Designation of a senior officer as the Chief Investor Relations Officer to deal with dissemination of information and disclosure of UPSI.

d) Prompt dissemination of UPSI that gets disclosed selectively, inadvertently or otherwise to make such information generally available.

e) Appropriate and fair response to queries on news reports and requests for verification of market rumours by regulatory authorities.

f) Ensuring that information shared with analysts and research personnel is not UPSI.

g) Develop best practices to make transcripts or records of proceedings of meetings with analysts and other investor relations conferences on the official website to ensure official confirmation and documentation of disclosures made.

h) Handling of all UPSI on a need-to-know basis.

5. Legitimate Purpose

UPSI can be shared as an exception for legitimate purpose as per Policy for Determination of Legitimate Purpose as given in Annexure A.

6. Amendment

This Code shall be reviewed on an annual basis. Any amendments would be subject to the review and approval of the Audit Committee and the Board of Directors of the Company.

In the event that any provision of this Code conflicts with any law, rule or regulation that is in force for the time being, the said law, rule or regulation that is in force for the time being shall take precedence over the conflicting provision of the Code.

For transparent disclosure of this Code, every amendment thereto shall be promptly intimated to the stock exchanges where the securities of the Company are listed.

POLICY FOR DETERMINATION OF LEGITIMATE PURPOSE

1.  Background

Regulation 3(2A) of SEBI (Prohibition of Insider Trading) Regulations, 2015 requires determination and stipulation of legitimate purposes for sharing UPSI in the Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information.

The Company endeavours to preserve the confidentiality of unpublished price sensitive information (“UPSI”) and to prevent its misuse. To achieve this objective, and in compliance with the aforesaid Regulations, the Company has framed “Policy for Determination of Legitimate Purpose” (“Policy”) as a part of its Code of Fair Disclosure.

The words and expressions used but not defined herein shall have the meanings as ascribed to them under the Regulations.

2. Objective

The objective of this Policy is to identify ‘Legitimate Purposes’ for performance of duties or discharge of legal obligations, which will be considered as exception for procuring/communicating/providing/ allowing access to UPSI relating to the Company. Whether sharing of UPSI for a particular instance would be tantamount to ‘legitimate purpose’ would depend on the specific facts and circumstances of each case.

3. Legitimate Purpose

“Legitimate Purpose” shall include sharing of UPSI in the ordinary course of business by an insider with the following on a need-to-know basis:

a) promoters/founders and shareholders*

b) auditors (statutory, internal, secretarial, GST and any other Auditor, as applicable),

c) staff members of the Audit firm/team conducting the audit,

d) partners and collaborators,

e) lenders (both existing and prospective),

f) prospective investors,

g) customers,

h) vendors and suppliers,

i) bankers (including merchant bankers),

j) SEBI registered intermediaries, RBI registered NBFCs, Financial Institutions and Regulators,

k) legal advisors and professionals rendering services,

l) consultants and service providers,

m) credit rating agencies,

n) insolvency professionals

o) any other person with whom UPSI is shared,

(*) – Sharing of UPSI with the promoters/founders and shareholders will also be subject to the provisions of the shareholders’ agreement, as amended from time to time.

provided that such sharing would not amount to evasion or circumvention of the prohibitions under the Regulations.

The agreements entered into involve sharing of UPSI should have a “confidentiality clause” or else a separate non‐disclosure agreement shall be executed with parties to safeguard the disclosure of UPSI.

Any person in receipt of Unpublished Price Sensitive Information pursuant to a “legitimate purpose” shall be considered an insider for purposes of this Code/Policy and due notice shall be given to such persons to maintain confidentiality of such UPSI. Once it is determined that an employee/director is sharing Unpublished Price Sensitive Information in furtherance of legitimate purposes, such employee/director shall ensure that he/she complies with all applicable provisions of the Code of Conduct for Prohibition of Insider Trading pertaining to sharing/disclosure of Unpublished Price Sensitive Information.

4. Structured Digital Database

In compliance with Regulation 3(5) and 3(6) of SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company would maintain Structured Digital Database (SDD) containing the nature of UPSI and the names of such persons who have shared the information and also the names of such persons with whom information is shared under this Regulation along with the Permanent Account Number (PAN) or any other identifier authorized by law where PAN is not available in the following manner –

a) Sharing of UPSI, whether internally or externally, will be recorded in the SDD.

b) The SDD will not be outsourced and will be maintained with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database.

c) Such SDD should be maintained for not less than 8 years after completion of the relevant transactions.

d) In the event of receipt of any information from SEBI regarding any investigation or enforcement proceedings, the relevant information in the SDD shall be preserved till the completion of such proceedings.

e) Name of persons who have shared the information (UPSI) and with whom information (UPSI) is shared shall be captured digitally in database along with PAN or any other identifier.

5. Amendment

This Policy shall be reviewed on an annual basis. Any amendments would be subject to the review and approval of the Audit Committee and the Board of Directors of the Company.

In any circumstance where the terms of this Policy differs from any law, rule, regulation etc., for the time being in force, the law, rule, regulation etc., shall take precedence over this Policy.

This Policy and any subsequent amendment(s) thereto, shall be promptly intimated to the stock exchanges.

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Policy on Appointment of Statutory Auditors

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1. Background and Purpose

Reserve Bank of India (RBI) vide its notification No. RBI/2021-22/25 Ref.No.DoS.CO. ARG/SEC.01/08.91.001/2021-22 dated 27th April 2021 had issued Guidelines for Appointment of Statutory Central Auditors (SCAs) / Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) (“RBI Guidelines”). This Policy on Appointment of Statutory Auditors (“the Policy”) has been framed keeping in view the aforesaid RBI Guidelines as amended from time to time and applicable provisions of Companies Act, 2013 and the rules made thereunder.

In case of any inconsistency between the RBI Guidelines and this Policy, the guidelines issued by RBI from time to time shall prevail and that the Company shall ensure compliance with all the provisions of RBI Guidelines as prescribed in this regard from time to time.

2. Applicability

The Policy applies to appointment/re-appointment of SAs of the Company.

3. Eligibility Criteria of Statutory Auditors

3.1 In accordance with the RBI Guidelines, the audit firm(s) shall fulfil the following minimum criteria for being eligible to be considered for appointment as SAs of the Company:

a) There should be Minimum 3 (three) full-time partners (FTPs) associated with the firm for a period of at least three years.

b) Out of total FTPs, there should be Minimum 2 (two) fellow chartered accountant (FCA) partners associated with the firm for a period of at least three years.

c) There should be Minimum 1 (one) full-time partners/ paid Chartered Accountants (CAs) with Certified Information System Auditor (CISA)/ ISA qualification.

d) The relevant audit experience of the firm as Statutory Central/ Branch Auditor of Commercial Banks (excluding RRBs)/ UCBs/ NBFCs/ AIFI should be minimum 8 (eight) years.

e) There should be Minimum 12 (twelve) professional staff associated with the firm.

Explanation - FTPs in point (a), paid CA(s) in point (c), and professional staff in point (e) should be at least one-year continuous association with the firm as on date of empanelment to be considered them as FTPs/ paid CA(s)/ professional staff in the firm.

(Refer - Annex I of RBI Guidelines for detailed Eligibility criteria)

3.2 The audit firm(s) proposed to be appointed as the SA of the Company shall also comply with the other eligibility criteria as mentioned under Section 141 of the Companies Act, 2013 and rules made thereunder.

3.3 The audit firm(s) shall be strictly guided by the relevant professional standards in discharge of their audit responsibilities with highest diligence.

3.4 No audit firm(s) shall be considered for appointment as SA of the Company, if it exceeds the maximum number of statutory audit of entities during a particular year i.e. four commercial banks, Eight UCBs, Eight NBFCs and within the overall ceiling prescribed by any other statutes or rules.

4. Independence of Auditors

4.1 The Audit Committee of the Board (‘ACB’) shall monitor and assess the independence of the auditors and conflict of interest position in terms of relevant regulatory provisions, standards and best practices. Any concerns in this regard may be flagged by the ACB to the Board of Directors of the Company and concerned Regional Office (RO) of RBI.

4.2 The audit of the Company and any entity with large exposure to the Company for the same reference year should also be explicitly factored in while assessing independence of the auditor.

4.3 The time gap between any non-audit work i.e., services mentioned at Section 144 of Companies Act, 2013, internal assignments, special assignments, etc. by the SAs of the Company or any audit/non–audit work for the Company’s group entities should be at least one year, before or after its appointment as SAs. However, during the tenure as SAs, an audit firm may provide such services to the concerned entities, which may not normally result in a conflict of interest, and the Company may take a decision in this regard, in consultation with the ACB.

4.4 The restrictions as detailed in para 4.2 and 4.3 above, shall also apply to an audit firm under the same network of audit firms or any other audit firm having common partners.

5. Professional Standards of SAs

5.1 The SAs shall be strictly guided by the relevant professional standards in discharge of their audit responsibilities with highest diligence.

5.2 The ACB shall review the performance of SAs on an annual basis. Any serious lapses/negligence in audit responsibilities or conduct issues on part of the SAs or any other matter considered as relevant shall be reported to RBI within two months from completion of the annual audit. Such reports shall be sent with the approval/recommendation of the ACB with the full details of the audit firm.

5.3 In the event of lapses in carrying out audit assignments resulting in misstatement of financial statements, and any violations/lapses vis-à-vis the RBI’s directions/guidelines regarding the role and responsibilities of the SAs in relation to the Company, the SAs would be liable to be dealt with suitably under the relevant statutory/regulatory framework.

6. Tenure and Rotation

6.1 The SA shall be appointed for a continuous period of three years, subject to the firms satisfying the eligibility norms each year.

6.2 Further, in case of removal of SAs before the completion of three years tenure, the Company shall inform concerned RO at RBI about it, along with reasons/justification for the same, within a month of such a decision being taken.

6.3 An audit firm would not be eligible for reappointment for six years (i.e. two tenures) after completion of full or part of one term of the audit tenure with the Company.

7. Audit fees and expenses

7.1 The ACB shall decide and recommend the audit fees to the Board in accordance with the relevant statutory/regulatory provisions.

7.2 While recommending the audit fees, the ACB shall ensure that the same shall be reasonable and commensurate with the scope and coverage of audit, size and spread of assets, accounting and administrative units, complexity of transactions, level of computerization, identified risks in financial reporting, etc.

8. Procedure for appointment of SAs and reporting requirements

8.1 The Company will shortlist a minimum of 2 audit firms for every vacancy of SAs so that even if firm at first preference is found to be ineligible/refuses appointment, the firm at second preference can be appointed and the process of appointment of SAs does not get delayed.

8.2 The Company shall obtain a certificate, along with relevant information as per Form B (as prescribed by RBI guidelines) from the audit firm(s) proposed to be appointed as SAs to the effect that it complies with all the eligibility norms prescribed by RBI for the purpose. Such certificate shall be signed by the main partner/s of the audit firm proposed for appointment, under the seal of the said audit firm.

8.3 In addition to the above, prior to such appointment, a written consent of the auditor to such appointment and a certificate in compliance with applicable provisions of the Companies Act, 2013 and the rules made thereunder, shall be obtained from the SAs.

8.4 The ACB will review the independence, eligibility norms, terms of appointment and remuneration of the audit firm proposed to be appointed as SAs and recommend the appointment of the audit firm for approval of the Board. The Board will discuss and approve the appointment of SAs subject to approval of the shareholders in the ensuing Annual General Meeting.

8.5 Any casual vacancy in the office of an auditor shall be filled by the Board of Directors within thirty days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the Company at a general meeting convened within three months of the recommendation of the Board and the auditor shall hold the office till the conclusion of the next annual general meeting.

8.6 Upon appointment of SA by the Shareholders, the Company shall inform the auditors concerned of its appointment and file required return/forms with the Registrar of Companies within the timelines as prescribed under the Companies Act, 2013 and rules made thereunder.

8.7 The Company shall inform the concerned Regional Office of RBI about the appointment of SAs for each year by way of a certificate in Form A (as prescribed by RBI guidelines) within one month of such appointment, as may be amended from time to time.

9. Review of Policy

The Policy will be approved by the ACB and the Board and hosted on the official website of AFPL.

The Policy will be reviewed on an annual basis or as and when deem necessary by the ACB and Board in the context of changing regulation and guidelines.

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Resource Planning Policy

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This document is an electronic record in terms of Information Technology Act, 2000 and rules  thereunder as applicable. This electronic record is generated by a computer/electronic system and does  not require any physical or digital signatures.

1. SCOPE AND PURPOSE

1.1. In this Resource Planning Policy (“Policy”), “we” or “us” or “our” means Avanti Finance Private  Limited (“Company”), and includes its executive directors, officers, employees, as the context  may require.

1.2. In pursuance of direction from the Reserve Bank of India (“RBI”), Company has put in place  this Policy which inter-alia, covers the planning horizon and the periodicity of private  placements of non-convertible debentures (“NCDs”) of maturity more than 1 (one) year issued  by Company.

2. SOURCES

2.1. The resource mobilization shall be in line with the Asset Liability Matching (“ALM”) requirement of the Company. It is the endeavour of the Company that the funds are mobilized from a diversified group of sources so that no single lender would have an exposure of more  than 75% of the overall funding, unless otherwise specifically required by the Company. This  limit will be subject to review by the Company’s Board from time to time.

2.2. Broadly, the resource mobilization by the Company may be understood to comprise the  following sources:

(i) Loans from banks and financial institutions;

(ii) Retained earnings;

(iii) Issue of NCDs;

(iv) Issue of commercial paper; and/or

(v) Inter-corporate loans.

(vi) Securitisation – Direct assignment or Pass through Certificates

2.3. The proportion of the long-term and short-term resources for the Company shall be fixed from  time to time based on the business plan for each year approved by the Board of Directors of the Company..

2.4. The annual business plan of the Company will reflect the mix/ratio of the above sources in the overall  funds of the Company at the start of each financial year, in line with the  long-term and short-term requirements of the Company.

3. LONG-TERM RESOURCES

3.1. Resources with a maturity of more than 12 months shall be treated as long-term resources.

3.2. Borrowings from Banks and Financial Institutions: The Company may plan for raising long-term  resources from banks and financial institutions. The major source of funding for the Company  as of the date of adoption of this Policy are scheduled commercial banks and larger NBFCs.  While these would continue to be the biggest source of capital for meeting its funding  requirements, the Company shall endeavour to develop alternative sources of funding from other markets depending on the business requirements.

3.3. Retained Earnings: The Company may plough back its profits in such proportions based on the  maintenance of capital adequacy ratio (“CRAR”) stipulated by regulations from time to time.

3.4. Issue of Non-Convertible Debentures:  

3.4.1. Based on the business requirements of each financial year, the Company may issue  NCDs to high net-worth individuals and/or institutions or such other class or category of  investors. The timing and the amount of issue shall be decided by the Board or the finance committee and shall be  subject to the statutory and regulatory compliances as may be required. The total number of  subscribers in each issue shall not exceed the maximum number of subscribers fixed under  any of the applicable laws or regulations.

3.4.2. The issue of NCDs may be secured on the assets of the Company (moveable or immovable) in  line with the regulatory requirement (as amended from time to time). In the event such NCDs  are in the nature of secured debt, the charge shall be registered in accordance with the  provisions of the Companies Act, 2013.  

3.4.3. The Company shall issue NCDs for the purpose of its own balance sheet only and shall not  grant loans against the NCDs.

4. SHORT-TERM RESOURCES

4.1. Resources with a maturity of 12 months and less shall be treated as short-term resources.

4.2. The main sources are bank advances, commercial papers (“CPs”), Pass Through certificates, shareholder loans, working capital loan and overdraft facility Depending on the ALM requirements, the Company may borrow funds from banks and other financial institutions / corporates from  time to time and continue to issue CPs with maturity ranging from 1 to 12 months.

4.3. Subject to applicable laws and regulations, the Company may also avail inter-corporate loans  which are exempt from the purview of public deposits under the applicable directions of RBI.

5. REGULATORY REFERENCE

Master Direction- Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023

6. REVIEW

This Resource Planning Policy comes from the date of approval by the Board and shall be monitored and reviewed periodically by the Board of the Company.

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Policy for dealing with Unclaimed Amounts with respect to Non-Convertible Securities

Background

This Policy for dealing with unclaimed amounts lying with the Company (‘Policy’) has been framed and adopted by the Board of Directors, pursuant to Regulation 61A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR Regulations’) and SEBI Circular No. SEBI/HO/DDHS/DDHS-RAC-1/P/CIR/2023/176 dated November 08, 2023 on ‘Procedural framework for dealing with unclaimed amounts lying with entities having listed non-convertible securities and manner of claiming such amounts by investors’.

Objective

The Policy has been framed to standardize the process to be followed by the Company for the manner of handling the unclaimed dividend or interest/redemption amount lying with the Company pertaining to the Non-Convertible Securities issued by the Company.

Definitions

Capitalized terms used herein but not defined anywhere in the Policy shall have the meaning as prescribed to it in the Circular.

“Act” shall mean the Companies Act, 2013, as amended from time to time and Rules made there under.

“BENPOS” refers to the beneficiary position statement as received from the Registrar and Transfer Agent (RTA) of the Company on a record date.

“Client Master List (CML)” refers to a document issued by the depository participant (DP) of your Demat account.

“Company” shall mean Avanti Finance Private Limited.

“Escrow Account” means Escrow Account opened by the Company in any scheduled bank.

“IEPF” shall mean the ‘Investor Education and Protection Fund’ established by the Central Government of India in terms of section 125 of the Companies Act, 2013.

“Investors” means the holders of listed non-convertible securities of the Company.

“Listing Regulations” shall refer to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time.

“RTA” refers to the Registrar and Share Transfer Agent of the Company.

Transfer of Unclaimed Amounts

i. The Company shall make all the payments due to the respective Investor(s) as per the BENPOS received from RTA on the due date of payment as per the terms of the Disclosure Documents, as the case may be.

ii. In case the payment so made to the respective Investor(s) on the due date fails due to any of the following reason(s):

1. Dormant / NRE bank account provided by the investor(s)
2. Missing Bank account details of the Investor(s)
3. Incorrect/missing IFSC code
4. Mismatch of name of the investor & name of the bank account holder
5. Any other reason

Then, the Company shall reach out to the Investor(s) via telephone and email as available in the records of the Company, for the missing/incorrect details, if the Investor is not reachable, the Company shall issue a demand draft or cheque in favour of the respective Investor(s) and the same shall be sent to the registered address of the respective Investor(s) as available in the BENPOS on the payment date and keep a record of the speed post/courier details.

iii. In case the demand draft or cheque returns unclaimed to the Company due to any of the following reasons:

1. Addressee not found.
2. Addressee refused to collect the package.
3. Door locked.
4. Any other reason

Then the Company shall transfer all interest/ principal amount dueto such investor(s) to the Escrow Account, within 7 (seven) days from the dateof expiry of the period of 30 (thirty) days of the amounts becoming due i.e.within 37 days.

iv. It may be noted that the amount so transferred to the Escrow Account shall not bear any interest.

v. The Company shall publish a list containing the names of the Investor(s) and their respective amount(s) lying unclaimed on its website within a period of 30 (thirty) days from the date of transfer. Such a list shall also contain search facility for ease of access to the Investor(s). The cumulative details of the number of claims received, processed, pending, etc. shall also be available on the website of the Company.

vi. In case any amount is not transferred within the aforesaid period of (37 days), the Company shall pay interest on such amount for the period of default i.e. from the date of default till the date of transfer to the Escrow Account, at the rate of twelve (12) percent per annum or such other rate as may be prescribed, from time to time under the applicable laws. The said interest amount shall accrue to the Investor(s) in proportion to the amount remaining unclaimed.

vii. Any amount transferred to the Escrow Account which remains unpaid/unclaimed for a period of 7 (seven) years from the date of such transfer, shall be transferred to IEPF within a period of 30 (thirty) days.

Nodal Officer

The Investor(s) can raise their queries or grievances, relating totheir claim directly with the Nodal Officer at the below address:

The Company shall display the name, designation and contact details of the Nodal Officer on its website. In case there is a change in the Nodal Officer due to any reason, the Company shall designate another person as a Nodal Officer within fifteen days of such change.

Process for Claiming Unclaimed Amounts by Investors from the Company

i. Investors should first check whether any unclaimed interest/ principal is due to be payable to them from the details uploaded by the Company on its website.

ii. Investors / beneficial owners who are holding securities in dematerialized form can submit a signed Request Letter in the format mentioned in Annexure A of this Policy by mail /post addressing the Nodal Officer along with cancelled cheque/copy of Bank Passbook/ Bank Statement with the following details:

a. Name of the Investor

b. Bank Account No.

c. Nature of Bank Account (Savings Account/Current Account)

d. Branch address of the Bank

e. IFSC code

f. MICR code

1. For institutional Investors, constitutional documents and scanned copy (PDF/ JPG Format) of the relevant board resolution/authority letter, etc by authorized signatories
2. Certified copy of the updated Client Master List (CML) with revised/correct bank details

iii. The aforementioned procedure in respect of the investor shall apply, mutatis mutandis, to the legal heir/ successor/ nominee of the Investor. In case a claim is made by legal heir/ successor/ nominee, the following additional documents are required to be submitted.

Upon the death of security holder / joint security holders, the Nominee shall be treated as the claimant.

In case the securities are held singly/jointly with nomination:

a. Duly signed request form by the nominee;

b. Copy of death certificate attested by the nominee subject to verification with the original or copy of death certificate duly attested by a notary public or by a Gazetted Officer;

c. Self-attested copy of the PAN card of the nominee.

In case the securities are held singly/jointly without nomination:

a. A notarized affidavit from all legal heir(s) made on non-judicial stamp paper of appropriate value, to the effect of identification and claim of legal ownership to the securities.

However, in case the legal heir(s)/claimant(s) are named in the Succession Certificate or Probate of Will or Will or Letter of Administration as may be applicable in terms of Indian Succession Act, 1925 or Legal Heirship Certificate or its equivalent certificate issued by a competent Government Authority, an affidavit from such legal heir(s)/claimant(s) alone shall be sufficient.

b. Duly signed request form by the legal heir(s)/claimant(s);

c. Copy of death certificate attested by the legal heir(s)/claimant(s) subject to verification with the original or copy of death certificate duly attested by a notary public or by a Gazetted Officer.

d. Self-attested copy of the PAN card of the legal heir(s)/claimant(s);

e. Copy of Succession Certificate or Probate of Will or Will or Letter of Administration or Court Decree as may be applicable in terms of Indian Succession Act, 1925 or Legal Heirship Certificate or its equivalent certificate issued by a competent Government Authority, attested by the legal heir(s)/claimant(s) subject to verification with the original or duly attested by a notary public or by a Gazetted Officer.

f. Original Indemnity Bond duly signed by the Claimant in the format attached as Annexure B;

The legal heir/ successor/ nominee shall satisfy the provisions specified under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and circulars issued thereunder, for the transmission of non-convertible securities and/ or the corresponding claim thereon, as applicable.

iv. Manner of submission of claim:

a. An Investor or legal heir/successor/nominee of the Investor can claim for payment of any unclaimed dividend/interest/redemption amount lying with the Company by sharing the above-mentioned documents to the Nodal Officer of the Company through email or hardcopy at the address of the Company.

b. An Investor can raise their query/grievance, if any, relating to their claim to the Nodal officer.

v. Examination of the claim received by the Nodal Officer:

a. Upon receipt of a claim application, if the Company/Nodal Officer, upon examination, finds it necessary to call for further information or finds such application or document(s) to be defective or incomplete in any respect, it shall intimate the investor, of such need for information or defects or incompleteness, by e-mail or other written communication and direct the investor to furnish such information or to rectify such defects or incompleteness or to re-submit such application or document(s) within 30 (Thirty) days from the date of receipt of such communication, failing which the claim may be rejected.

vi. Timeline for processing the claim:

a. The Company shall within 30 (Thirty) days of receipt of a claim application from an investor or complete information as called upon from the investor, remit the payment to the investor using electronic modes of funds transfer.

Time Frame for Claiming the Amount

Investors should claim the amount of unclaimed interest/ principal upon maturity within 7 (seven) years from the due date of the payment. After 7 (seven) years, the amount shall be transferred to IEPF.

Review

The Policy will be approved by the Audit Committee and the Board and hosted on the official website of the Company.

The Policy will be reviewed on an annual basis or as and when deem necessary by the Audit Committee and Board in the context of changing regulation and guidelines.

REQUEST LETTER

Annexure A

REQUEST LETTER

Date:

To

Avanti Finance Private Limited

# 2727, 2nd floor, 1st Main Road, HAL 3rd Stage,

Ward no. 58 (Old No. 83) New Thippasandra,

Bangalore, Bangalore North, Karnataka, India, 560075

Sub: Credit of the unclaimed interest/principal amount on Non-Convertible Debentures issued by Avanti Finance Private Limited

Ref: Folio No/DP ID ___________and Client ID:____________

Dear Sir / Madam,

I/We, ________________, am/are holding Non-Convertible Debentures (“NCDs”) issued by Avanti Finance Private Limited (“the Company”), as per below details:

With reference to the various reminders by the Company and/or telephonic conversation with the official of the Company, I/we request you to credit the unclaimed amount in the Bank Account, details of which are given as below:

Please find enclosed herewith the following documents to enable the Company to process the Unclaimed Amount:

1. Self-attested copy of PAN

2. Self-attested copy of Aadhar Card or Passport

3. Updated Client Master List or Demat account statement

4. Cancelled Cheque of the same bank account which is reflected in the CML

5. For institutional Investors, constitutional documents and scanned copy of the relevant board resolution/authority letter, etc. by Authorized Signatories

Request you to process the credit of the unclaimed amount.

Yours Faithfully,

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Sign:

Name of Investor:

Address:

Contact Details:

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Annexure B

INDEMNITY BOND

(To be executed by the Claimant on a non-judicial stamp paper and notarised)

THIS DEED OF INDEMNITY is made at _______ this _______ day of ________of_____________ By Mr./Ms. ____________ wife/son/daughter of Mr./Ms. _______ residing at _____________________________________ (which expression shall unless it be repugnant to the meaning or context thereof be deemed to mean and include them and their respective heirs, executors, administrators and legal representatives) of the First Part.

IN FAVOUR OF:

Avanti Finance Private Limited a Company registered under the provisions of Companies Act, 2013 having its registered office at # 2727, 2nd floor, 1st Main Road, HAL 3rd Stage, Ward no. 58 (Old No. 83) New Thippasandra, Bangalore, Bangalore North, Karnataka, India, 560075 (hereinafter called as the “AFPL/Company” which expression shall include unless repugnant to the subject or context be deemed to include their successors, permitted assigns, representatives) on the Other Part.

WHEREAS:

1. Mr./ Ms. _________ holds ___________ (Non-Convertible Securities) in the Company and the interest/ redemption/ dividend (strike out the options which are not applicable) remains unclaimed with respect to said security.

2. That Mr. __________ has passed away on _______________.

3. That I ______________ (hereinafter referred as “Claimant”), being the legal heir of the deceased have approached AFPL and requested for release of the unclaimed interest/ redemption/ dividend amount (hereinafter referred to as “Unclaimed amount”) due to the _____________ (name of original investor) lying with the Company.

4. That in support of the above said request, I have enclosed the following documents:

a) .....

b) .....

NOW, THEREFORE, THIS INDEMNITY BOND WITNESSETH as under:

In consideration of the above having agreed to comply with my request on my executing an indemnity bond in favour of the AFPL, I, the Claimant, hereunder for myself, my heirs, executors, administrators and assigns do hereby agree to indemnify and keep indemnified the Company, its successors, directors, manager and their heirs, executors and assigns from and against all actions, suits, proceedings, accounts, claims and demands whatsoever for or on account of the said securities or any part thereof or otherwise arising out of release of said unclaimed amount in my favor and from and against all losses, costs, claims, actions, demands, risks, charges, expenses, damages and losses arising in any manner whatsoever.

I hereby solemnly affirm and certify that the statements contained in above paragraphs are true to the best of my knowledge, information and belief and that nothing material has been concealed from being disclosed and are binding on me.

I hereby also confirm that all the documents submitted to Company are true and correct.

IN WITNESS whereof, this bond of indemnity is executed by my hand on this ____ day of _____, _____.

Signature: ________________

Name of Claimant: _______________

Signed before me

(Signature of Notary)

Official Stamp and Seal of the Notary and Registration No.

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Policy for Preservation of Documents

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1. Introduction

Avanti Finance Private Limited (the "Company") is registered with the Reserve Bank of India ("RBI") as a non-banking financial company ("NBFC"), by a certificate of registration dated August 13, 2021 bearing registration number N-02.00338 issued by RBI, Bengaluru (old certificate dated June 23, 2017 bearing registration number N.13.02191 issued by RBI, Mumbai). The Company is a non-deposit taking, middle layer NBFC.

The policy is prepared pursuant to the Companies Act, 2013 and Regulation 9 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as “Listing Regulations”) which mandates that a listed entity shall have a policy for the preservation of documents.

2. About the Policy

The purpose of this Policy is to ensure that necessary records and documents of the Company are adequately protected and maintained. This Policy contains guidelines for identifying documents that need to be maintained, the period of retention of such documents and the authorized person/department responsible to maintain documents. This Policy aims to provide efficient and systematic control on the periodicity of maintenance of documents. This Policy applies to all departments and business functions of the Company. It not only covers the various aspects on preservation of the documents, but also beneficial for the safe disposal/destruction of the documents and keeping a record of the same.

3. Definitions

1. “Act” means the Companies Act, 2013, Rules framed thereunder and any amendments thereto.
2. “Applicable Law” means any law, rules, circulars, guidelines or standards under which the preservation of the Documents has been prescribed.
3. “Authorized Person” means any person duly authorized by the Board.
4. “Board” means the Board of directors of the Company or its Committees.
5. “Books of Account” as per Section 2(13) of the Companies Act 2013 includes records maintained in respect of—

(i) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place;

(ii) all sales and purchases of goods and services by the company;

(iii) the assets and liabilities of the company; and

(iv) the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section;

1. “Document” as per section 2(36) of the Companies Act 2013 includes papers, notes, agreements, notices, agendas, circulars, advertisements, declarations, forms, minutes, registers, correspondences, challan or any other record required under or in order to comply with the requirements of any applicable law, whether issued, sent, received or kept in pursuance of the Act or under any other law for the time being in force or otherwise, maintained on paper or in electronic form.
2. “Electronic Form” means any contemporaneous electronic device such as computer, laptop, compact disc, floppy disc, space on electronic cloud, or any other form of storage and retrieval device, considered feasible, whether the same is in possession or control of the Company or otherwise the Company has control over access to it.
3. “Electronic Record(s)” means the electronic record as defined under clause (t) of sub- section of section 2 of the Information Technology Act, 2000.

The words and phrases used in this Policy and not defined here shall derive their meaning from the Applicable Law.

4. Interpretation

Terms that have not been defined in this policy shall have the same meaning assigned to them in the Companies Act, 2013, and / or Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

5. Roles and Responsibilities

This Policy is applicable to all documents maintained in physical and electronic mode by the Company. The preservation of documents should be such as to ensure that there is no tampering, alteration, destruction or anything that endangers the content, authenticity, utility or accessibility of the documents. The documents not specifically covered under this policy shall be preserved and maintained in accordance with the provisions of the respective acts, rules, guidelines and regulations as applicable under which those documents are maintained.

The respective Functional/ Departmental heads of the Company shall be responsible for maintenance and retention of documents in respect of the areas of operations falling under the charge of each of them, in terms of this Policy.

6. Authenticity

Where a document is being maintained both in physical electronic form, the authenticity with reference to the physical form should be considered for every purpose.

7. Guidelines

Regulation 9 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, provides that the listed entity shall have a policy for preservation of documents, approved by its Board of Directors, classifying them in at least two categories as follows –

a. Documents whose preservation shall be permanent in nature;

b. Documents with preservation period of not less than eight years after completion of the relevant transactions.

Accordingly, the Company has classified the preservation of documents to be done in the following manner:

a. Documents that need to be preserved and retained permanently;

b. Documents that need to be preserved and retained for a period of 8 years as specified under the Companies Act, 2013 or Regulations;

c. Documents that need to be preserved and retained for a period of not less than three years as specified under Secretarial standards issued by The Institute of Company Secretaries of India;

d. Documents that need to be preserved and retained for such period as prescribed under any statute or regulation as applicable to the Company;

e. Where there is no such requirement as per applicable law, then for such period as the document pertains to a matter which is “Current”.

An indicative list of the documents and the time-frame of their preservation is provided in Annexure A.

8. Modes of preservation

The Documents may be preserved in

a. Physical form; or

b. Electronic Form

The official of the Company who is required to preserve the document shall be Authorised Person who is generally expected to observe the compliance of statutory requirements as per applicable law.

The preservation of documents should be such as to ensure that there is no tampering, alteration, destruction or anything which endangers the content, authenticity, utility or accessibility of the documents.

The preserved documents must be accessible at all reasonable times. Access may be controlled by the concerned Authorised Person with preservation, so as to ensure integrity of the Documents and to prohibit unauthorized access.

9. Archival of documents

Documents mentioned in Clause 9 above shall be maintained/ preserved in the following manner:

A) Documents maintained in physical form:

1. All information and/or documents pertaining to current financial year and for one preceding financial year shall be kept handy and maintained in such a manner that their retrieval is easy and quick.

2. All documents pertaining to the period prior to one preceding financial year, shall be kept in good condition at least up to the minimum period specified for their maintenance / preservation in Annexures attached hereto. The said records be also maintained in such a manner that their retrieval is easy and quick.

B) Documents maintained in electronic form:

1. All documents pertaining to current financial year and for one preceding financial year shall be maintained on server and Backup be maintained on scheduled time and day. The documents shall be maintained in such a manner that their retrieval is easy and quick.

2. Back up of all documents pertaining to the period prior to one preceding financial year shall also be maintained on server, in good condition at least up to the minimum period specified for their maintenance / preservation. The said records be also maintained in such a manner that their retrieval is easy and quick.

10. Destruction of documents

The documents specified in Annexure A which are not required to be maintained and preserved permanently, may be destroyed after the expiry of the specified retention period in such mode and under the instructions approved by the Functional/ Departmental Heads. Any deviation will be approved by the Chief Compliance Officer.

11. Dissemination of the Policy

The approved Policy shall be uploaded on the Company’s website, www.avantifinance.in and circulated to all Branches and departments.

12. General

Notwithstanding anything contained in this policy, the Company shall ensure compliance with any additional requirements as may be prescribed under any laws/regulations either existing or arising out of any amendment to such laws/regulations or otherwise and applicable to the Company from time to time

13. Review

This Policy shall be subject to review, if necessary. Any change/amendments in Applicable Laws with regard to maintenance and preservation of documents and records shall be deemed to be covered in this Policy without any review. Any change/amendments to this Policy shall be approved by the Board of Directors.

This Policy comes into effect immediately on the date of approval by the Board of Directors.

Records as per the Companies Act, 2013

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‍Accounts and Finance Records

Tax Records

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NBFC - Preservation of records

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Karnataka Shops and Establishments Act, 1961

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Policy on Internal Guidelines on Corporate Governance

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Company’s philosophy on Corporate Governance

Avanti Finance Private Limited (‘Company’ / ‘AFPL’) is a non-deposit taking NBFC registered with the Reserve Bank of India. The Company acknowledges its responsibility as a corporate citizen and is committed to upholding the highest standards of Corporate Governance. It strives for transparency in business ethics and accountability to customers, the government, and other stakeholders. The Company conducts its operations in alignment with sound corporate practices and continuously seeks to enhance them by adopting industry best practices.

Corporate governance refers to the framework of rules, practices, and processes that guide a company's administration and control. It ensures a balance of interests among key stakeholders, including shareholders, employees, customers, and the broader community in which the company operates. These corporate governance guidelines support the Company in achieving its objectives by covering all aspects of operations, management, strategic planning, internal controls, and regulatory compliance.

The Company ensures strong governance by implementing effective policies and procedures, which are mandated and regularly reviewed by the Board of Directors (‘Board’) or its committees.

RBI guidelines on Corporate Governance

Pursuant to Regulation 100 of the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 and as amended from time to time (‘Master Directions’), the Company has framed the following Internal Guidelines on Corporate Governance.

Board of Directors

The Board shall have an optimum combination of Executive, Non-executive and Independent Directors in line with the requirements of the provisions of the Companies Act, 2013 and other applicable laws, Shareholders’ Agreement as amended from time to time and the Articles of Association of the Company.

The Board shall meet at least four times a year, with a maximum time gap of one hundred and twenty days between any two meetings.

The Board shall be responsible for ensuring overall compliance with the Company's Corporate Governance and overseeing its business affairs. This includes guiding business strategy, maintaining financial soundness, making key personnel decisions, shaping the internal organization and governance structure, managing risks, and fulfilling compliance obligations. In carrying out these duties, the Board must act with honesty, integrity, and in the best interests of the Company. The Board must ensure that the Company's organizational structure supports both the Board and Senior Leadership Team (SLT) in fulfilling their responsibilities while enabling effective decision-making and strong governance. This includes clearly defining the key responsibilities and authorities of the Board, SLT, and those overseeing control functions.

The Board should actively participate in Company’s key matters, stay informed about significant changes in the business and external environment, and take timely actions to safeguard the Company's long-term interests.

Duties and Responsibilities of Board of Directors

In accordance with the provisions of Section 166 of the Companies Act, 2013 and as a matter of corporate governance, the directors of the Company have the following duties: –

• Shall act in good faith in order to promote the objects of the Company for the benefit of its members as a whole, and in the best interests of the Company, its employees, the shareholders, the community and for the protection of the environment.

• Shall exercise his/her duties with due and reasonable care, skill and diligence and shall exercise independent judgement.

• Shall disclose any situation in which he/she may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the Company.

• Shall not achieve or attempt to achieve any undue gain or advantage either to himself/herself or to his/her relatives, partners, or associates and if such director is found guilty of making any undue gain, he/she shall be liable to pay an amount equal to that gain to the Company.

• Shall not assign his/her office and any assignment so made, shall be void.

Minimum Information to be placed before the Board

Pursuant to the Master Directions, the disclosures to be made by the Company to the directors shall include but not be limited to the following:

a. all relevant information for taking informed decisions in respect of matters brought before the Board;

b. The strategic and business plans and forecasts;

c. The organizational structure of the Company and delegation of authority;

d. Corporate and management controls and systems including procedures;

e. Economic features and marketing environment;

f. Information and updates as appropriate on the Company’s products;

g. Information and updates on major expenditure;

h. Periodic reviews of performance of the Company;

i. Report periodically about implementation of strategic initiatives and plans; and

j. Advise the director about the levels of authority delegated in matters placed before the Board.

Committees of the Board

To focus effectively on the issues and ensure expedient resolution of diverse matters, the Board constitutes a set of Committees with specific terms of reference / scope. The Committees shall operate as empowered representatives of the Board as per their Charter / terms of reference.

In compliance with the applicable provisions of the Companies Act, RBI guidelines and in order to meet business exigencies, the Company has constituted the following Board committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Risk Management Committee

4. IT Strategy Committee

5. Finance Committee

6. Committee of the Executives (monitoring and follow-up on fraud cases)

7. Asset-Liability Management Committee

The terms of reference, roles and responsibilities of the aforesaid Committees is provided hereunder:

1. Audit Committee:

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2. Nomination and Remuneration Committee

3. Risk Management Committee

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4.     IT Strategy Committee

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5.     Finance Committee

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6. Committee of the Executives (monitoring and follow-up on fraud cases)

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7. Asset-Liability Management Committee

Further, as part of the Company’s commitment to good corporate governance, the Board has established the following additional committees to ensure transparency, accountability, and effective oversight of key functions:

1. IT Steering Committee

2. Whistle Blower Committee

3. Internal Complaints Committee

4. Credit Committee of Executives

5. Employee Stock Option Committee

6. Outsourcing and Procurement Committee

7. Information Security Committee

Fit and Proper Criteria

The Company has in place a Board approved policy for ascertaining the ‘Fit and Proper Criteria of directors’ at the time of appointment and on continuing basis. Pursuant to the said Policy, the Company obtains necessary disclosures from the Directors from time to time.

The Company ensures compliance with the provisions laid down in the said Policy. The Company shall ensure to furnish to the RBI on a quarterly basis, statement on change of directors and a certificate confirming that fit and proper criteria in selection of the directors has been followed. The same should be submitted to the Regional Office of RBI within 15 days of the close of the respective quarter and the statement for the quarter ending March 31, shall be certified by the Statutory Auditors.

Adoption of Policies

The Company has framed and adopted policies as per regulatory requirements and as approved by the Board of the Company which forms an integral part of the overall corporate governance framework of the Company.

Vigil Mechanism

The Company has formulated and adopted a vigil mechanism / whistle blower policy to enable directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of Company’s Code of Conduct. The vigil mechanism / whistle blower policy shall provide a mechanism for an individual to report violations without fear of victimisation.

Rotation of Statutory Auditors /Audit Partner(s)

The appointment and rotation of Statutory Auditors shall be as per the Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) issued by RBI and as amended from time to time and Policy on Appointment of Statutory Auditors adopted by the Company and as may be amended from time to time.

Key Managerial Personnel

In terms of the Master Directions, the Company ensures that except for directorship in a subsidiary, Key Managerial Personnel shall not hold any office (including directorships) in any other NBFC-ML or NBFC-UL.

Independent Directors

Company duly ensures that the independent director shall not be on the Board of more than three NBFCs (NBFCs-ML or NBFCs-UL) at the same time. Further, the Board ensures that there is no conflict arising out of their independent directors being on the Board of another NBFC at the same time.

Disclosure and transparency

The Company shall put up to the Board of Directors, at regular intervals, as may be prescribed by the Board in this regard, the following:

1. The progress made in putting in place a progressive risk management system and risk management policy and strategy followed by the Company;

2. Conformity with corporate governance standards viz., in composition of various committees, their role and functions, periodicity of the meetings and compliance with coverage and review functions, etc.

Chief Risk Officer (“CRO”)

Pursuant to Para 95 of the Master Directions, the Company has appointed a Chief Risk Officer (CRO) of the Company with clearly specified roles and responsibilities. The CRO is required to function independently so as to ensure highest standards of risk management.

Review

The Policy will be reviewed on an annual basis or as and when deemed necessary by the Board in the context of changing regulation and guidelines and emerging best practices with a view to enhancing the Company’s governance.

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Assignment Policy/ Policy on Transfer of Loan Exposures

Click here

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Compensation Policy for Key Managerial Personnel (KMP) and Senior Management

Click here

Policy for Treatment of Wilful Defaulters And Large Defaulters

Click here

Policy on Child Protection and PSEAH (Protection from Sexual Exploitation, Abuse and Harassment)

Click here

Policy on Fit and Proper Criteria of the Directors

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Policy on Loans and Advances to Directors and Senior Officers

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Prevention of Sexual Harassment Policy

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