1. What is the legal Action/Decision taken against the defaulter cases?

Defaulter: - Defaulter is a person who is having bad credit history and continuously falling short in repaying the installment amount. Due to that financier suffer losses and also the efficiency. So its a challenging task to reduce such default cases. To make the hassle free recovery we can take the following legal action against defaulters. A) Legal Notice: - It is the most common and first stage of taking the legal action against defaulter. We send legal notice and give the time Period to deposit the remaining outstanding amount. We also mention the repercussions if falling short of not obliging the notice. Its the first stage which makes us legally strong and further takes the legal action against defaulter if falling short obliging the Notice. We can appoint a panel lawyer who will take the issue to the court and after 30 days court may send summon to the defaulter or we can reposes the vehicle under the state law. B) 138 of NI Act: - Section 138 of Negotiable instrument act apply when dishonour of cheque with the insufficiency of funds in the account of a payee. If the cheque bounces due to the insufficiency of the funds in Bank a/c, the person is deemed to commit an offence and without prejudice of any other provision of the act is punished with imprisonment (upto 2 years) or fine which may extends upto twice the amount of cheque. The Negotiable Instruments Act, 1881 was amended by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 wherein a new Chapter XVII was incorporated for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque. We levy 500 per cheque in case of dishonour.

We can take the necessary action against the defaulter under section 138 of NI Act. A summary of these provisions (138 of NI Act) has been given as under. 1. AFTER the receipt of dishonoured cheque with return memo from bank, demand notice to be sent by registered post with AD within 30 days from the date of receipt of return memo and dishonored cheque from bank. 2. IN demand notice, 15 days time to be given to the accused for making payment from the date of receipt of notice by the accused. 3. IN case of non-payment within 15 days, CAUSE OF ACTION arises on 16th day from the date of receipt of notice by the accused. 4. COMPLAINT case under section 138 of NEGOTIABLE INSTRUAMENT ACT is to be filed within 30 days from the date of CAUSE OF ACTION, i.e. from 16th day of receipt of notice by the accused. 5. SA (Solemn Affirmation), i.e. preliminary evidence either by disposition or by affidavit in evidence to be completed under section 200 CRPC for issue of summon. 6. AFTER issue of summon next stage shall be for S.R. (Summon Report). 7 (a) in case the summon is served, party has to appear and Furnish Surety Bond as instructed by the Magistrate (take bail)) and the next stage would for plea. (Plead guilty or not guilty). (b) In case the summon is served and party does not appear, Non Bailable Warrant (NBW) of arrest would be issued as per the provisions of CRPC.

C) FIR in 156(3):- Under the section 156 (3), we can approach to the Magistrate to register a criminal offence against the defaulter. He can direct the officer in charge of concerned police station to hold a proper investigation and take all such necessary steps that may be necessary for ensuring a proper investigation including monitoring the same or not. D) Arbitration: - General Parlance meaning of Arbitration Settling of disputes between two or more persons through some neutral person who is acceptable to all. In Legal terminology what it means: It is a reference of a dispute or difference between not less than two parties for determination, after hearing both the parties in a judicial manner, by a person other than a court.

Cases allocated to the Law Firms, Demand Notices (Loan Recall Notice) are printed and sent to the customers, by Registered Post, Ref Letter sent: appointing the Arbitrator, Customer agrees to pay ? NO 1st Arbitration Notice is sent to the customer, YES Customer agrees to pay? NO On the Date of hearing, a claim petition is filed,

Accounts are identified for initiating Arbitration Case Closed,

Execution of Award, Settlement, Collect Cash, Award Received,

YES Evidence / Arguments, Exparte Evidence / Arguments,

NO YES YES

Respondent appears? Final Arbitration Notice is sent to the customer,

Respondent appears ?

NO

Other important sections of this act are:a) Section 11- appointment of arbitrator b) Section 17- interim measures ordered by arbitral tribunal (only per agreement) etc. c) After 90 days from the date of passing the Award by Arbitrator, we can file execution of Arbitral Award. d) There are about 86 sections under arbitration and conciliation act, 1996 E) Repossession of the vehicle: - Before the repossession we send the legal notice to remind the borrower to repay dues, if the borrower doesnt pay, state law allow to repose the vehicle. If the borrower doesnt pay to take the vehicle back, we sell the vehicle on auction. The money owned by the auction is deducted from the balancing amount of the borrower. And the Disposal loss incurred, we can again take legal action against defaulter.

2. Strategy to Improve collection in the area. 4

Collection is important and done through 3 different ways. A) PDC Collection: - It is the most convenient type of collection method as neither customer has to travel to the branch to deposit cash nor our field executive has to collect from his residence. Every month on the due date we draw cheque of installment amount from the concerned banks of the customers. B) Branch Direct: - Customer walks in to the branch and deposit EMI on the due date. C) Field collection: - Our collection executive get the collection from the field allocated to them. We have to recover two types of collection:a) Current demand: - Commonly known as CD of branch. CD reflects the monthly amount receivable of the branch. It is considered soft collection without any outstanding or aging. b) Over Due: - Commonly known as OD of the branch. OD reflects the outstanding amount which is due from certain period of time. Even a single rupee short is count under OD.

Strategy:1. OD reduction: - collection executive should always try to get 100% CD collection, and also take targets to achieve outstanding amount of certain accounts, this will increase the efficiency of executive as well as branch. OD of the branch should not exceed but it should decrease with every passing month.

2. NOC :- NOC issue is the frequent problem and it effect business as well as collection, suppose a customer is having 2-3 accounts from us and having ETR record, if we delay in NOC issue for 1 contract, he might be dissatisfied with our service and make delayed payment of other contracts. Which affects the efficiency?

3. PDC collection: - we should try to convince customers about benefits of PDC collection through cheques, but only for those who always have considerable amount of cash flow in their bank account and our existing customer. This will improve our efficiency and reduce the cost of handling cash from field. 4. Product category: - Default may be intentional or due to financial inability, we can check the specific products like e.g. Maxximo load is not very successful and frequent problem of engine failure occur, if a customer purchases it and is only dependent on the income from the vehicle, and if vehicle gets failure, it is difficult to pay EMI of the loan. Which we may suffer the losses.

5. Guarantor help: - sometimes it is advisable to take guarantor help to recover the outstanding amount. So always make strong guarantor who has good image and have good income base and can help us to convince the owner to repay the loan amount. 6. Follow up: - Follow up should be proper and regular. We should telecall to customer as well as guarantor if even a single installment is due; if the amount is not recovered we should visit to the customer personally and recover the outstanding amount.

7. Responsibility of Business executive:- it should make mandatory that the business executive will be equally responsible for the collection upto 1 year tenure , and if he fails to deposit EMI, Business executive incentive will be effected, and business executive will only forward good cases to the company. 8. Strong legal system: - We should have strong legal system to look after 3+ aging cases. We should send legal notice to 3 and above aging cases and take legal action if customer is not following the legal compliance. If falling short we should apply legal action. Especially in the NPA cases we should take strong legal actions like securitization, section 138 of NI act and Repossession. 9. Repossession agent: - We should also take necessary help of repo agents to reposes the vehicle if the customer is having strong back up and continuously failing short to repay installments as those who are intentional defaulters. This will not only just help to handle one such case but changes our image that we are not the lenient with the defaulters. And that will send strong Message in the market.

3. Enumerate 5 ways which you suggest should be strictly followed to strengthen the legal? A) Legal notice: - we should use legal procedure against defaulters by initiating through legal notice. This will strengthen our position if customers fail to compliance the legal notice. And necessary legal action can be taken. B) Arbitration: - after receiving the arbitration award, after 90 days we can execute the award. Court orders and attachment warrant of movable/ immovable property of under the arbitration and conciliation act, 1996. Court first issues the warrant against the movable income. If the award amount is much more than the movable property court issues the warrant against the immovable property. Then court appoints a receiver to auction the property. The amount realized through auction is first utilized to satisfy the awarded amount and if remaining to the judgment debtors.

C) Section 138 NI act:- We should also use section 138 of NI act of dishonour of cheque. Within 15 days of receiving of notice from bank along with cheque memo and dishonour cheque is send to the customer place. And 15 days from receiving of the notice he should pay the amount otherwise legal would be applicable against him D) Notice to Guarantor: - we should also take guarantor in loop and send him the legal notice that he should be equally responsible for the legal repercussions if the owner of the vehicle have bad credit history. This will create panic to the guarantor and force customer to repay EMI.

E) Securitisation :- the Securitisation and reconstruction of financial assets and enforcement of security interest act, 2002 ( hereafter referred to as The securitization act) has been enacted with an intention to strengthen the creditors rights through foreclosure and enforcement of securities by the banks and financial institutions by conferring on the creditors the right to seize the secured asset and sell the same in order to recover dues promptly bypassing the costly and very time consuming legal process through court. This will help to reduce NPA and decline the losses due to these defaulters. 4. What are the strategies you propose to improve dealer relationship and business? It is important for a financier to have good relationship with dealer for the business to grow. Both are dependent on each other in one or in other way. But a dealer has always many options for the financiers. So to vanish the competition we can take the necessary actions. A) Quick process: - once we get any business from dealer, he requires delivery order from us so that he can deliver the vehicle and get payment faster. If we reduce our TAT from vehicle delivery to the payment to dealer, dealer will give more and more business to us. B) Better schemes:- Our scheme doesnt cater to the all the customer profile, although we had very good schemes in the festival season but in other months we dont stand up to the competition from other financier like Magma, Chola etc. as they have year long similar schemes. So we should have different mix-up to cater various customers profile.

C) Self- sourced business: - Our existing customers who directly approach to us for the vehicle, we should bring into direct contact with dealer with realizing him that we also help to bring business for them. Like in Dholpur and Hydone, where dealer presence is negligible and customer directly approaches to financier, we can give leads to dealer. As we dont have to pay payout for that and it also maintain the relationship between dealer and financier. D) Trade advance: - if the dealer have good business in the area and have good customer profile we should encourage the dealer to take TA Limit. For the financier it will help in bringing more business as dealer will have a pressure to sale the stock and get interest free trade advance. And also makes process faster where DO can be issued later and vehicle can be delivered at the dealer point will completing all the pendencies. E) Payout and incentive: - we should also give incentive to executive at the dealership point from those dealers where competition is fierce and sale of the vehicle directly depends upon executive relationship with financier. We can make a scheme that if executive give us certain amount of cases we will give them incentive. F) Sharing the Data base of the customer: - we can also share some data base of our existing customers who are willing to purchase vehicle. If the dealer able to convert any of those we will be the financier for that. And no payout will be given to dealer for that.

G) Direct Marketing activities :- we should also involve the participation of dealer directly under direct marketing activity, like shikhar sammelan etc and arrange demo for their vehicle as this will enhance 10

the dealer presence in the area and build the mutual relationship with financier H) Spending time at dealership: - Our business executive should spend considerable amount of time at dealership to make strong relationship and if customer approach at the time when executive is present at dealership he can directly handle the customer.

I) Prompt FI status:- We should also improve on providing FI status quickly because more the time we take to provide FI status ,Chances are case may be shifted to other financier.

5.) Strategies to improve self-sourced business. A) SOH: - Stock on hand: - We should focus upon cases those are matured and have SOH= 0 As those contracts which have been completed or NOC pending. We should telecall these customers for Refinance business or for the new business. As these are generally our good customers so if they associate us again our customer base will be strong and default rate will be minimal. B) Each one bring one: - this is great concept specially for the collection executive, when they are in field they gets lot of enquiries per day from our exiting customer or meet with a new person, they should leave there card also to the concerned person if they maintain 11

that record we can have self sourced customer base, and we will not have to pay any payout or brokerage to the dealer. C) Direct Marketing: - this is the viable concept and proved to be successful in the festival season, some methods we are already following like shikhar sammelan, Road show (Carnival) etc. we invite the dealer of the area to participate in the activities, and this also helps in bringing new enquiries. D) Sending Mailers to the existing customers: - We can also send thanksgiving letter to our existing customers for their association with mahindra finance. Along with we can also send mailers of special schemes for certain products, for that we can design a scheme with dealer for the particular product. This will enhance the relationship as well us bringing new business. E) Tele calling: - We should tele call to our existing customers whose accounts are maturing; we should to borrower as well as guarantor and generate leads, this way we can generate direct business without dealer dependency.

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