ART HOUSING FINANCE (INDIA) LIMITED

KNOW YOUR CUSTOMER (KYC) GUIDELINES

AND

ANTI-MONEY LAUNDERING (AML) MEASURES

1. Preamble

As part of the best corporate practices, ART Housing Finance (India) Limited

(hereinafter referred to as “the Company” or “AHF”) has adopted ‘Know Your

Customer (hereinafter referred to as “KYC”)’ and ‘Anti Money Laundering

(hereinafter referred to as “AML”) Measures’ (referred to as “Guidelines”) for

lending/ credit/ operations/ financial dealings in line with the extant guidelines

framed by National Housing Bank (hereinafter referred to as “NHB”).

The objective of these Guidelines is to prevent the Company from being used,

intentionally or unintentionally, by criminal elements for money laundering/

fraudulent/anti-social activities. KYC procedures also enable the Company to

identify/ know/ understand their customers and their financial dealings better,

which in turn help them manage their risks prudently.

These Guidelines are framed keeping in mind the above and has the following

key elements:

i. Customer Acceptance Policy

ii. Customer Identification Procedures

iii. Monitoring of Transactions

iv. Risk Management

2. For the Purpose of these Guidelines, a Customer is defined as:

i. a person or entity that maintains an account and/ or has a business

relationship with the Company;

ii. one on whose behalf the account is maintained (i.e. the beneficial

owner);

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iii. beneficiaries of transactions conducted by professional intermediaries,

such as stock brokers, chartered accountants, solicitors, mutual funds

etc. as permitted under the law; and

iv. any person or entity connected with a financial transaction which can

pose significant reputational or other risks to the Company, say, a wire

transfer or issuance of a high value demand draft as a single

transaction.

3. Customer Acceptance Policy

The Customer Acceptance Policy ensures the following aspects of a Customer

relationship:

i. The Company does not open an account in anonymous or fictitious/

benami name(s).

ii. The Company defines and categorizes the customer into low, medium

and high risk perception on the basis of the location of customer,

business profile, his clients, mode of payments, volume of turnover,

social and financial status, etc. Customers requiring very high level of

monitoring, e.g. Politically Exposed Persons (PEPs) will be given due

consideration and may, if considered necessary be categorized even

higher.

iii. The Company collects required documents and other information in

respect of different categories of customers depending on perceived

low/ medium/ high risk and guidelines issued from time to time.

Declaration is obtained from the Customer that proceedings/

transactions are not in violation of Prevention of Money Laundering

(PML) Act 2002 and NHB Regulations issued from time to time.

iv. The Company does not open an account, or close an existing account

where appropriate customer identification/ due-diligence measures

cannot be applied, to ensure verification of the identity and also obtain

documents required as per the risk categorization due to non-co-

operation of the customer/ non-reliability of the data/ information

furnished to the Company. However, the Company build-in

safeguards to avoid any harassment to the Customers.

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- Permanent Address proof from new customer is collected. The

documents which can be accepted as proof of address as prescribed

by NHB, are mentioned in Annexure-II.

- For customers who wish to pre-close their account with AHF,

following will be collected:

(a) Permanent Address proof (As per Annexure-I).

(b) A declaration from the customer regarding source of funds

being used for pre-closure of the loan account.

v. In the following circumstances, the account may be opened/ operated

by a mandate holder or by an intermediary, such as chartered

accountants, solicitors, mutual funds, stock brokers etc., in a fiduciary

capacity hence the customer is permitted to act on behalf of another

person/entity, in conformity with the established law and practices:

- if applicant is NRI/PIO

- if applicant is a limited company

- if applicant is a partnership firm

vi. The Company ensures before processing any loan disbursement either

by the Company and/or through any specialized agency that the

identity of the Customer does not match with any other person with

known criminal background/ with forbidden entities such as

individual terrorists or terrorist organizations, etc.

4. Customer Profile Preparation (Indicative)

LOW RISK CUSTOMERS

MEDIUM RISK CUSTOMERS

HIGH RISK CUSTOMERS

1. Salaried 1. Salaried with variable / unstructured income

1. NRIs

2. Government Employees

2. Self-employed other than High Net worth Individuals (herein after referred to as “HNIs”)

2. HNIs

3. PSU Employees 3. Salaried with Private Limited Companies

3. Trusts, Charitable Organizations

4. Reputed MNC/Public Ltd Cos

4. HNIs with occupational risk of more than 3 years

4. Closely held companies

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5. Politically Exposed Persons (herein after referred to as PEPs)

6. Non face to face customers

7. Persons with dubious reputation as per available public information

The Company prepares a customer profile for each new customer during the

credit appraisal process based on risk categorization as mentioned in these

guidelines. The customer profile contains information relating to the

customer’s identity, social/ financial status, nature of business activity,

information about his clients’ business and their location, etc. The nature and

extent of due diligence depends on the risk perceived by the Company. During

the credit appraisal process of the customer, details are recorded along with

his/ her profile based on meeting with the Customer (by the Company

representative) apart from collection of applicable documents; this is as per the

Company’s credit and product norms which are incorporated in the Credit risk

policy and are in practice. However, while preparing customer profile, the

Company seek only such information from the Customer which is relevant to

the risk category and is not intrusive. Any other information from the customer

is sought separately with his/her consent and after opening the account.

The customer profile is accorded the status of a highly confidential document

and details contained therein is not disclosed for cross selling or for any other

purposes; unless for the purpose of risk minimization or fraud prevention or

required by law & regulations or for social/ economic responsibility.

As per KYC policy, for acceptance and identification, customers are categorized

broadly into low risk, medium risk, and high risk categories.

(A) Low risk customers are the individuals (excluding high Net Worth)

and entities whose identities and sources of wealth can be easily

identified, have structured income and transactions in whose accounts

by and large conform to the known profile. In these cases, only the

basic requirements of verifying the identity and location of the

Customer have to be met. Illustrative examples of low risk customers

is as under:

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i. Salaried employees with well defined salary structures

ii. People belonging to government departments, regulators, statutory

bodies

iii. People working with government owned companies, regulators

and statutory bodies, etc.

iv. People belonging to lower economic strata of the society whose

accounts show small balances and low turnover

v. People working with Public Sector Units

(B) Customers that are likely to pose a higher than average risk to the

Company may be categorized as medium or high risk depending on

customer’s background, nature and location of activity, country of

origin, sources of funds and his client profile, etc. The Company shall

applies enhanced due diligence measures based on the risk

assessment, thereby requiring intensive ‘due diligence’ for higher risk

customers, especially those for whom the sources of funds are not

clear. Examples of high risk customers requiring higher due diligence

may include:

i. Non-resident customers,

ii. HNIs, without an occupational track record of more than 3 years.

iii. Trusts, charities, NGOs and organizations receiving donations

iv. Companies having close family shareholding or beneficial

ownership,

v. Firms with 'sleeping partners',

vi. PEPs of foreign origin,

vii. Non-face to face customers,

viii. Those with dubious reputation as per available public information,

etc.

PEPs will be given due consideration and may, if considered necessary be

categorized even higher risk, and their account will be open only after formal

approval of Senior Management (VP & above).

In the event of an existing customer or the beneficial owner of an existing

account subsequently becoming a PEP, the Company shall obtain Senior

Management’s approval in such cases to continue the business relationship,

and also undertake enhanced monitoring as indicated and specified in

Annexure-I.

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5. Customer Identification Procedure

Customer identification means identifying the customer and verifying his/ her

identity by using reliable, independent source documents, data or information.

As per Rule 9 of the Prevention of Money-Laundering (Maintenance of Records

of the NATURE and Value of Transactions, the Procedure and Manner of

Maintaining and Time for Furnishing Information and Verification and

Maintenance of Records of the Identity of the Clients of the Banking Companies,

Financial Institutions and Intermediaries) Rules, 2005 (hereinafter referred to as

PML Rules), requires every HFC:

a. at the time of commencement of an account–based relationship, verify the

identity of the Customer and obtain information on the purpose and intended

nature of the business relationship, and

b. in all other cases, verify identity at the time of processing:

i. the transaction of an amount equal to or exceeding rupees fifty thousand,

whether conducted as a single transaction or multiple transactions that

appear to be connected, or

ii. any international money transfers operations.

Pursuant to Rule 9 of the PML Rules, the Company identifies the beneficial owner

and take all reasonable steps to verify his/ her identity. The Company also

exercises ongoing due diligence with respect to the business relationship with

every customer and closely examine the transactions in order to ensure that

transactions are consistent with our knowledge of the customer profile, his

business/ activity nature and risk categorization.

The Customer Identification procedure is carried out at different stages, i.e.

a. while establishing a relationship;

b. carrying out a financial transaction or

c. When there is a doubt about the authenticity/ veracity or the adequacy of

the previously obtained customer identification records/ information.

In pursuance to Rule 9 of the PML Rules, the Company obtains sufficient and

reliable documents or information necessary to establish its satisfaction, the

identity of each new customer, (whether regular or occasional) and the clear

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purpose of the intended nature of relationship. According to the said Rules, the

documents/ information to be obtained for identifying various types of

customers i.e. individuals, companies, partnership firms, trusts, unincorporated

association or a body of individuals and juridical persons. Customer

identification requirements keeping in view the provisions of the said rules are

indicated in Annexure-I, also indicative list of the nature and type of

documents/ information that may be relied upon for customer identification is

given in the Annexure-II. The Company ensures compliance to the above rule.

The Company has framed internal guidelines based on their experience of dealing

with such persons/entities, normal prudence and the legal requirements.

The Company implements the Client Identification Programme to determine the

true and correct identity of its customer keeping the above in view.

6. Monitoring of Transactions

Ongoing monitoring is an essential element for effective KYC procedures.

However, the extent of monitoring will depend on the risk categorization of the

account.

The Company pays special attention to all complex, unusually large transactions

and all unusual patterns which have no apparent economic or visible lawful

purpose. The Company may prescribe various methods for calculating the

threshold limits for a particular category of accounts and pay particular attention

to the transactions which may exceed these limits.

Transactions that involve large amounts of cash inconsistent with the normal and

expected activity of the Customer particularly attracts the attention of the

Company. High-risk accounts are subjected to intensify monitoring. The

Company has set key indicators for such accounts, taking note of the background

of the customer, such as the country of origin, sources of funds, the type of

transactions involved and other risk factors.

“Periodic updation of KYC

AHF carries out periodical Updation of KYC information of every customer, which includes the following:

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1. KYC exercise is done at least once in every two years for high risk customers, every eight years for medium risk customers and every ten years for low risk customers. Such KYC exercise includes all measures for confirming the identity and address and other particulars of the Customers that the bank/FI may consider reasonable and necessary based on the risk profile of the Customer, taking into account whether and when client due diligence measures were last undertaken and the adequacy of data obtained.

2. The Company does not seek fresh proofs of identity and address at the time of periodic updation, from those customers who are categorized as ‘low risk’, in case there is no change in status with respect to their identities and addresses. A self-certification by the Customer to that effect suffice in such cases. In case of change of address of such ‘low risk’ customers, they could merely forward a certified copy of the document (proof of address) by mail/post, etc. AHF does not insist on physical presence of such low risk customer at the time of periodic updation. The time limits prescribed at (i) above applies from the date of opening of the account/ last verification of KYC.

3. Fresh photographs is obtained from minor customer on becoming major.”

7. Risk Management

The Management under the supervision of the Board of Directors of the Company

ensures that an effective KYC programme is put in place by establishing

appropriate procedures and ensuring effective implementation. It covers proper

management oversight, systems and controls, segregation of duties, training and

other related matters. Responsibility is explicitly allocated within the Company

for ensuring that the Company’s policies and procedures are implemented

effectively. The Company devises procedures for creating Risk Profiles of their

existing and new customers and apply various Anti Money Laundering measures

keeping in view the risks involved in a transaction, account or business

relationship.

8. Internal Audit

The Company’s Internal Audit and Compliance functions evaluates and ensures

adherence to the KYC policies and procedures. As a general rule, the Compliance

function provides an independent evaluation of the Company’s own policies and

procedures, including legal and regulatory requirements. The Management under

the supervision of Board/ Audit Committee ensures that the audit function is

staffed adequately with skilled/ trained individuals.

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Internal Auditors specifically check and verify the application of KYC procedures

at the branches/ offices and comment on the lapses observed in this regard. The

compliance in this regard is put up before the Audit Committee of the Board in

quarterly meetings or with their normal reporting frequency.

9. Training & Development

The Company have an ongoing employee training programs so that the staff

members are adequately trained in KYC procedures & Anti-Money Laundering

measures. Training requirements have different focuses for frontline staff,

compliance staff and staff dealing with new customers so that all those concerned

fully understand the rationale behind the KYC policies and implement them

consistently.

10. Customer Education

The Company educate their customers on the objectives of the KYC programme

so that customer understands and appreciates the motive and purpose of

collecting such information. The Company has made KYC guidelines available on

website, has displayed the same in branches/ office and has prepared specific

literature/ pamphlets, etc., which can be made available to customer upon

request, to educate the Customer about the objectives of the KYC programme.

11. Introduction of New Technologies

The Company pays special attention to any money laundering threats that may

arise from new or developing technologies including online transactions that may

favour anonymity, and takes measures, if needed, to prevent their use in money

laundering activities as and when online transactions are started/ accepted by the

Company.

12. KYC for the Existing Accounts

The Company applies the KYC norms to the existing customers’ loan accounts on

the basis of materiality and risk envisaged by it for those existing loan accounts.

13. Non-Cooperation by the Customer in respect of KYC norms

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Where the Company is unable to apply appropriate KYC measures due to non-

furnishing of information and/or non-cooperation by the Customer, the Company

follows up with the existing identified customers for KYC compliance. Further,

closure decision (if at all) depends upon the internal assessment and is taken by

the Senior Management (VP & above), only after issuing due notice to the

customer explaining the reasons.

14. Applicability to branches/offices and subsidiaries outside India

The KYC guidelines applies to all the branches/ offices to the extent local laws

permit as and when the Company opens branches/ offices. When local applicable

laws and regulations prohibit implementation of these guidelines, the same is

informed to National Housing Bank and Reserve Bank of India (RBI).

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15. Appointment of Principal Officer

The Company has designated a senior employee as ‘Principal Officer’ who is

located at Head/ Corporate Office and is responsible for monitoring and reporting

of all transactions and sharing of information as required under the law. He/ she

is maintaining close liaison with enforcement agencies, Housing Finance

Companies (hereinafter referred to as “HFCs”) and any other institution(s) which

are involved against money laundering and combating financing of terrorism.

Details of Principal Officer and any change therein is informed to NHB and

Financial Intelligence Unit India (FIU).

16. Maintenance of records of transactions

The Company maintains proper record of the transactions as required under

Section 12 of the Prevention of Money Laundering Act, (PMLA), 2002 read with

Rules 3 of the PML Rules as mentioned below:

i. All cash transactions of the value of more than rupees ten lacs or its

equivalent in foreign currency.

ii. All series of cash transactions integrally connected to each other which have

been valued below rupees ten lacs or its equivalent in foreign currency

where such series of transactions have taken place within a month.

iii. All transactions involving receipts by non-profit organizations of rupees ten

lacs or its equivalent in foreign currency.

iv. All cash transactions where forged or counterfeit currency notes or bank

notes have been used as genuine and where any forgery of a valuable

security has taken place; any such transactions; and

v. All suspicious transactions whether or not made in cash and by way of as

mentioned in the Rule 3 (1) (D).

An Illustrative List of suspicious transaction pertaining to Housing Loan is

given in Annexure-III A & III B

17. Records to contain the specified information

The Company maintains records referred to above in Rule 3 of PML Rules to

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contain the following information:

i. the nature of the transactions.

ii. the amount of the transaction and the denominated currency.

iii. the date on which the transaction was conducted; and

iv. the parties to the transaction.

18. Maintenance and preservation of records

The Company is maintaining the following records pursuant to Section 12 of

PMLA, 2002:

(a) records of all transactions referred to in clause (a) of Sub-section (1) of section

12 read with Rule 3 of the PML Rules for a period of ten years from the date

of transactions between the clients and the Company.

(b) records/ documents pertaining to the identification of customers e.g. copies

of documents, like Passport, Identity Card, Driving Licenses, PAN, Utility

bills etc. for a period of ten years from the date of cessation of transactions

between the Customer and the Company.

The Company ensures proper maintenance and preservation of records/ information

in a manner (in hard and soft copies) that allows data to be retrieved easily and

quickly whenever required, or when requested by the competent authorities upon

request through the Principal Officer.

19. Reporting to Financial Intelligence Unit India (FIU-IND)

The Principal Officer reports information relating to cash and suspicious transactions,

if detected, to the Director, Financial Intelligence Unit India (FIU-IND) as advised in

terms of the PML rules, in the prescribed formats as designed and circulated by NHB

at the following address:

Director, FIU - IND,

Financial Intelligence Unit India,

6th Floor, Hotel Samrat,

Chanakyapuri

New Delhi - 110021

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The employees of the Company maintains strict confidentiality of the fact of

furnishing/ reporting details of suspicious transactions.

Note: Reports are submitted every month by the 15th day of succeeding month; FIU-

IND does not accept NIL Cash/ Suspicious Reports if no such transaction occurred

during a particular period.

Further, as per Directors FIU – IND order dated 30th December, 2015, the list of Red

Flag Indicators (RFIs) is enclosed as an annexure which is a part of the current KYC

policy.

20. Compliance under Foreign Contribution (Regulation) Act, 1976

The Company ensures that the provisions of Foreign Contribution and Regulation

Act, 1976 (hereinafter referred to as “FCRA”), wherever applicable, are duly adhered

to.

FCRA regulate the acceptance and utilization of foreign contribution or foreign

hospitality received by certain specified persons or associations such as candidates

for election, journalist, Judges/Government servants, political party, etc.

However, law permits certain persons or associations to accept the foreign

contribution with the approval of the Central Government, as per the provisions of

FCRA. In those cases, copy of approval or letter of intimation shall be taken from the

customer.

21. General

Where the Company is unable to apply appropriate KYC measures due to non-

furnishing of information and/or non-cooperation by the Customer, the Company

may consider closing the account or terminating the business relationship after

assessment of the account by Senior Management (VP & above) and above upon

issuing notice to the Customer explaining the reasons for account closure.

General Guidelines

(i) Confidentiality of customer information:

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Information collected from customers for the purpose of opening of account is treated as confidential and details thereof is not divulged for the purpose of cross selling, etc. Information sought from the Customer should be relevant to the perceived risk and be non-intrusive.

(ii) Hiring of Employees

It may be appreciated that Know Your Customer norms (KYC)/Anti Money Laundering standards (AML)/ Combating of Financing of Terrorism (CFT)/Obligations of banks under PMLA, 2002 have prescribed to ensure that criminals are not allowed to misuse the banking channels. It has been therefore mandated by the Company that adequate screening mechanism is put in place as an integral part of personnel recruitment/hiring process.

(iii) Employee training:

The Company have an ongoing employee training programme so that the members of staff are adequately trained in AML/CFT policy. The focus of the training is different for frontline staff, compliance staff and staff dealing with new customers. The front desk staff is specially trained to handle issues arising from lack of customer education. Proper staffing of the audit function with persons adequately trained and well-versed in AML/CFT policies of the bank, regulation and related issues is ensured.

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Annexure I

CUSTOMER IDENTIFICATION REQUIREMENTS

(INDICATIVE GUIDELINES)

Trust/ Nominee or Fiduciary Accounts

1. There exists the possibility that trust/nominee or fiduciary accounts can be

used to circumvent the customer identification procedures. The Company

determines whether the Customer is acting on behalf of another person as

trustee/nominee or any other intermediary. If so, the Company insists on receipt

of satisfactory evidence of the identity of the intermediaries and of the persons

on whose behalf they are acting, as also obtain details of the nature of the trust or

other arrangements in place. While opening an account for a trust, the Company

takes reasonable precautions to verify the identity of the trustees and the settlors

of trust (including any person settling assets into the trust), grantors, protectors,

beneficiaries and signatories. Beneficiaries are identified when they are defined.

In the case of a 'foundation', steps are taken to verify the Founder

Managers/Directors and the beneficiaries, if defined. If the Company decides to

accept such accounts in terms of the Customer Acceptance Policy, the Company

takes reasonable measures to identify the beneficial owner(s) and verify

his/her/their identity in a manner so that it is satisfied that it knows who the

beneficial owner(s) is/are.

Accounts of companies and firms

2. The Company is vigilant against business entities being used by individuals as

a ‘front’ for maintaining accounts with it. The Company verifies the legal status

of the legal person/ entity through proper and relevant documents. The

Company verifies that any person purporting to act on behalf of the legal/

juridical person/entity is so authorized and identify and verify the identity of

that person. The Company examines the control structure of the entity,

determine the source of funds and identify the natural persons who have a

controlling interest and who comprise the management. These requirements may

be moderated according to the risk perception, e.g. in the case of a Public/ Listed

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Company it will not be necessary to identify all the shareholders.

Client accounts opened by professional intermediaries

3. When the Company is aware of the fact or has a reason to believe that the

client account opened by a professional intermediary is on behalf of a single

client, then the said client is identified. The Company holds 'pooled' accounts

managed by professional intermediaries on behalf of entities like mutual funds,

pension funds or other types of funds. Where the Company relies on the

'Customer Due Diligence' (hereinafter referred to as “CDD”) done by an

intermediary, it ensures that they satisfy themselves and that the intermediary is

regulated and supervised and has adequate systems in place to comply with the

KYC requirements. It should be understood that the ultimate responsibility for

knowing the customer vests with the HFC.

Accounts of Politically Exposed Persons (PEPs)

4. Politically exposed persons are individuals who are or have been entrusted

with prominent public functions, e.g. Heads of States or of Governments, senior

politicians, senior government/ judicial/ military officers, senior executives of

state-owned corporations, important political party officials, etc. In such cases

the Company gathers sufficient information on any person/ customer of this

category intending to establish a relationship and check all the information

available on the person in the public domain. The Company also verifies the

identity of the person and seek information about the sources of funds before

accepting PEP as a customer. The decision to open an account for PEP is taken at

a senior level which should be clearly spelt out in Customer Acceptance Policy.

The Company also subject such accounts to enhanced monitoring on an ongoing

basis. The above norms is/ may also be applied to the accounts of the family

members or close relatives of PEPs.

Accounts of non-face-to-face customers

5. The Company does not open any account of non-face-to-face customers.

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Annexure II

Sr. No. Parameter

Individual Partnership Firm Company

Features

1. Application Form

Application form should be completely filled with correct information in legible handwriting, preferably by the applicant.

Any correction/overwriting on the application form have to be countersigned by applicant(s).

Reference details need to be filled with correct demographic details as this helps in case the customer defaults

Contact Nos and Email IDs are to be captured and are MUST.

Name, identity, address and date of birth on Application form should match with the relevant KYC documents given by the applicant.

In the case of non-individual being on loan structure, Partner / Director should sign on behalf of the Firm/Company affixing rubber stamp showing the designation of the Signatory and required Resolution is compulsory.

2. Photograph Latest & color passport size photograph

Photograph to be pasted and not stapled

Photograph should be duly signed across by the applicants.

Photograph should be without CAP and Eye Shades

3. PAN Card Copy

In case the Applicant/Co-applicant whose income is considered for calculation of eligibility is below taxable limits - acknowledged copy of Application for PAN Card (Form 49) can be obtained in lieu of PAN Card Copy before Disbursement.

Alternatively Form 60 or form 61 may be obtained as per the relevance of the situation.

4. Identity Proof

(Any one with photo for individuals and all for Partnership Firms and Private Limited

Passport

Pan Card

Driving License

Voters ID Card

Aadhar Card

Certified Copy of latest amended Partnership Deed

Copy of Pan Card of the Firm

List of Partners with Residential Address, PAN and Contact Nos.

Certified copy of Latest Amended MOA along with certificate of Incorporation

Copy of PAN CARD of the Company

List of Directors, their Residential Address, Contact Numbers, PAN CARD and Contact Nos.

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Sr. No. Parameter

Individual Partnership Firm Company

Features

Company. Resolution passed by the Board of Directors to authorize Applicant to transact business on its behalf. (Also can be sanctioned condition)

5. Age Proof

(Any one)

Passport

PAN Card

Driving License

Birth Certificate (Govt agency)

School Leaving certificate (10th/12th)

Voter ID Card

Aadhar card

PAN Card PAN Card

Certificate of registration issued by the MCA/ROC

6. Residence Address /Principal Business Place proof

(any one)

Passport

Latest Electricity Bill/ Telephone Bill (land line)

Driving License

Voter ID Card

Bank Statement from schedule / nationalized bank.

Ration Card

Letter from the Employer

Copy of Registered Rent Agreement

Copy of Sale

Latest Electricity or Telephone bill of the firm

Business Registration Certificate, if any (VAT, Service Tax etc)

Latest Telephone bill of the Company

Business Registration certificate, if any (VAT, Service Tax, etc)

Certificate of Incorporation

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Sr. No. Parameter

Individual Partnership Firm Company

Features

deed

Aadhar Card

Gas Connection pass book

Property or Municipal

7. Company/ Business Profile

In the Case of Salaried:

Company profile from the employer of the Applicant on the letter head of the Company whose income is considered. However, for reputed companies/ Companies having website with financial details, this can be waived.

Sample Format is given in Annexure-4.

In the Case of SEP/SENP

On letter head of the Proprietorship / Firm / Company. Or can be collected by way of download from the website of the company if available.

8. Self-attestation & original document seen

All KYC documents, Application form & copy of Income documents must be self-attested by the respective applicants.

Every page of income documents and bank statements to be self-attested. In case of bulk bank statements 1st and last page of the bank statement can be self-attested. Similarly, 1st and last page of audit report scheduled to the balance sheet can be self-attested. However, balance sheet, profit and loss account, Computation of Income & IT acknowledgement copy has to be self-attested.

Copies of the documents provided along with the application form must be verified with the originals by the concerned AHF officer.

Original seen stamp to be affixed while verifying the documents with the originals and the officer should put his/her Signature with Name, Designation & Employee Code on copy of such verified document.

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Sr. No. Parameter

Individual Partnership Firm Company

Features

Signature Verification

Signature Verification is mandatory for all applicants or signatories.

Any one of the following to be considered for signature verification:

- Banker’s signature verification

- Passport Copy

- PAN Card

- Driving license with photograph and signature.

- Clearance of processing fees cheque - Concerned officer has to verify signature on application form with processing fees cheque and copy of PF Cheque need to be attached in the file.

9. ID proof of applicant/Co- applicant , whose income is not considered for loan purpose

1. Preferably Voters ID card, which is easily available. or 2. Notarized Affidavit with Left Hand thumb impression verified and photo pasted cross signed as ID proof in absence of Standard ID, witnessed/ Identified: (a) by a person known to AHF or (b) by Sarpanch/ Village Gram Panchayat officer or (c) by Any Gazetted officer or Branch Manager of Any Nationalized Bank.

The Applicant and Co-applicant in such cases must personally visit to the branch/ Service Centre and loan document execution with Left Hand Thumb Impression of an illiterate Co- applicant must be obtained in the presence of Branch Manager/ OTIC/ Service Centre In charge and they should exercise due diligence for execution by verifying the Left Hand Thumb Impression.

Note: Where ‘simplified measures’ are applied for verifying for the limited purpose of proof of address the following additional documents are deemed to be Officially Verified Documents (OVDs):

a. Post Office savings bank account statement;

b. Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address;

c. Letter of allotment of accommodation from Employer issued by State or

Central Government Departments, Statutory or Regulatory Bodies, and

Public Sector Undertakings, Scheduled Commercial Banks, Financial

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Institutions and Listed Companies. Similarly, leave and license

agreements with such employers allotting official accommodation

d. Documents issued by Government departments of foreign jurisdictions

and letter issued by Foreign Embassy or Mission in India.

Where ‘simplified measures’ are applied for verifying the identity of customers the following documents shall be deemed to be 'officially valid documents:

a. identity card with applicant's Photograph issued by Central/State

Government Departments, Statutory/Regulatory Authorities, Public

Sector Undertakings, Scheduled Commercial Banks, and Public Financial

Institutions

b. Letter issued by a gazetted officer, with a duly attested photograph of the person.

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Annexure III A

SUSPICIOUS TRANSACTIONS PERTAINING TO HOUSING LOANS

(ILLUSTRATIVE LIST)

a) Customer is reluctant to provide information, data, documents;

b) Submission of false documents, data, purpose of loan, details of accounts;

c) Refuses to furnish details of source of funds by which initial contribution

is made, sources of funds are doubtful etc;

d) Reluctant to meet in person, represents through a third party/Power of

Attorney holder without sufficient reasons;

e) Approaches a branch/office of the Company, which is away from the

customer’s residential or business address provided in the loan

application, when there Company’s branch/office nearer to the given

address;

f) Unable to explain or satisfy the numerous transfers in the statement of

account/ multiple accounts;

g) Initial contribution made through unrelated third party accounts without

proper justification;

h) Availing a top-up loan and/or equity loan, without proper justification of

the end use of the loan amount;

i) Suggesting dubious means for the sanction of loan;

j) Where transactions do not make economic sense;

k) There are reasonable doubts over the real beneficiary of the loan and the

flat to be purchased;

l) Encashment of loan amount by opening a fictitious bank account;

m) Applying for a loan knowing fully well that the property/dwelling unit to

be financed has been funded earlier and that the same is outstanding;

n) Sale consideration stated in the agreement for sale is abnormally

higher/lower than what is prevailing in the area of purchase;

o) Multiple funding of the same property/dwelling unit;

p) Request for payment made in favour of a third party who has no relation

to the transaction;

q) Usage of loan amount by the Customer in connivance with the vendor/

builder/ developer/ broker/ agent etc. and using the same for a purpose

other than what has been stipulated.

r) Multiple funding/ financing involving NGO/ Charitable Organisation/

Small/ Medium Establishments (SMEs)/ Self Help Groups (SHGs)/ Micro

Finance Groups (MFGs)

s) Frequent requests for change of address;

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t) Overpayment of installments with a request to refund the overpaid

amount

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Annexure III B

II. SUSPICIOUS TRANSACTIONS PERTAINING TO BUILDER/ PROJECT

LOANS

(ILLUSTRATIVE LIST)

a) Builder approaching the HFC for a small loan compared to the total cost

of the project;

b) Builder is unable to explain the sources of funding for the project;

c) Approvals/sanctions from various authorities are proved to be fake.

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Annexure IV

In order to ensure effective reporting of Suspicious Transactions (STRs), the

below RFIs categorized under the below headings identifies the following

transactions/ situations as RFIs which (upon adequate diligence and

justification) may be identified as a Suspicious Transaction and then onward

reported as a STR.

Part A: RFIs that are Customer Centric:

Sr.

No.

Sub- Category Types

1. Identity of Customer a. Submission of false Identification

Documents.

b. Customer holding multiple PAN.

c. Identification documents which could not

be verified within reasonable time or

replaced with another set of Identification

documents.

d. Accounts opened with names very close to

other reputed business entities.

e. Customer uses aliases and a variety of

similar but different addresses.

f. Customer spelling his or her name

differently from one transaction to another,

without justification.

g. Name of customer indicated differently in

different KYC documents enabling creation

of multiple customer identities.

h. A Customer/Company who is reluctant or

refuses to provide complete information,

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data, documents and to reveal details about

its activities or to provide financial

statements/Employment related

documents / KYC documents.

i. Doubt over the real beneficiary of the loan

account

j. The Customer is reluctant to meet in

person, represents through a third

party/Power of Attorney holder without

sufficient reasons.

k. The Customer approaches a branch/office

of the Company, which is away from the

customer’s residential or business address

provided in the loan application, when

there is Company’s branch/office nearer to

the given address.

l. Changes in mailing address of the

Customer more than [twice]* in last 6

months

m. Unusual capital, partnership, management

or employment structure of companies

compared to other institutions in the same

sector or general company structure.

n. Current data not updated with relevant

regulatory authorities, without justification.

o. Existing or new partners/shareholders

abstaining from giving information about

their personal and commercial background,

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having indications that they did not have

interest, education or experience in the field

in which the company operates

2. Background of a

customer

a. The Customer details matched with watch

lists (e.g. UN list, Interpol list etc.)

b. Notice/Letter from a law enforcement

agencies/ Regulators/ Other Government

Agencies: In case of such notices received,

Principal Officer should be informed for

further action/advise on the matter. This

notice shall be treated as an alert to analyse

the transactions in such accounts and if the

transactions appear to be suspicious the

same should be included in the STR along

with the details mentioned in the “Ground

of Suspicion”. These Accounts are to be

reported even if they are closed.

c. Adverse Media / Public News: Branches/

offices should check for adverse media

coverage with the names of the Customer.

The names of the Customers that are

pointed as suspects or accused in such

reports shall be searched and in case of

matches the same may be further internally

analyzed for reporting purposes.

d. Customer shows income from “foreign

sources” on loan application without

providing proper documentation.

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3. Credit Bureau

Information

Multiple addresses reflecting against the name

of the customer which has not been shared/ or

does not match with the employment history/

residence details provided.

Part B: RFIs that are Transaction / Loan Account Centric:

Sr.

No.

Sub- Category Types

1. Multiple Accounts a. Use of Bank A/c’s of Third Parties for

payment of EMIs at more than 03 (Three)

occasions.

b. Change in the bank account from which

PDC/ ECS are issued more than 03 (Three)

in last 12 (Twelve) months

c. Total amount of payments through DD,

Cash and 3rd party Cheques valued at more

than 10 Lacs EMIs/ part payments in last

30 days

Customer appears to have recently

established a series of new relationships

with different financial entities.

2. Nature of Activity in an

Account

a. Unusual activity compared with past

transactions.

b. Encashment of loan amount by opening a

fictitious bank account.

c. Activity inconsistent with what would be

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expected from declared business/ profile

of the Customer.

d. Part closure to the extent of 90% or more of

the loan amount in one or more occasions

within 6 months.

e. Loan Accounts with original tenor of more

than 1 year are foreclosed within 6 months

after disbursal of loan.

f. Usage of loan amount by the Customer in

connivance with the vendor/ builder/

developer/ broker/ agent etc. and using

the same for a purpose other than what has

been stipulated.

g. Overpayment of instalments in cash with a

request to refund the excess amount.

h. Customer conducts transactions at different

physical locations in an apparent attempt

to avoid detection.

i. Customer presents confusing details about

the transaction or knows only few details

about its purpose.

j. Customer's home or business telephone

number has been disconnected or there is

no such number when an attempt is made

to contact customer shortly after opening

account.

k. Account indicated by customer to receive

interest payment against a deposit placed is

attached by Government Authorities.

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3. Nature of transactions a. Unusual or unjustified complexity shown

in a Transaction that may normally be done

in simpler manner.

b. Initial contribution made through

unrelated third party accounts without

proper justification;

c. No economic rationale or bonafide purpose

behind the transaction.

d. Availing a top-up loan and/or equity loan,

without proper justification of the end use of

the loan amount

e. Suggesting dubious means for the sanction

of loan or placing a deposit.

f. PAN not disclosed but multiple deposits

raised (across branches to avoid TDS).

4. Value of transactions a. Value just under the reporting threshold

amount in an apparent attempt to avoid

reporting.

b. Multiple related cash transactions which are

broken to just below the following

thresholds:

i) Rs. 50,000/- in a day

ii) Rs.10,00,000/- in a month

c. Value inconsistent with the client’s apparent

financial standing.

d. Deposits made in cash amounting to Rs 10

Lacs and above and without details of

source.

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5. Transaction amongst

family members

Transaction between members of the same

family to avail a loan wherein there is no

genuine transaction / rationale.

6. Transaction more than

specified percentage of

the EMI , paid in cash

by a Delinquent

Borrower.

Delinquent borrower for more than 6 months

repays the loan in cash beyond [twice]* the

original EMI.

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Part C: RFIs that are Property/Property Document Centric:

Sr.

No.

Sub- Category Types

1. Cash payment

indicated in the Sale

Deed/Agreement

Cash payment shown as consideration paid to

the seller for purchase of a property and the

source of which cannot be explained or proof not

provided by the Customer.

2. Valuation of

property

Valuation of property shown considerably lower

in the sale deed than the government approved

rate/ RESIDEX, especially on sale deeds

executed within a period of 12 months.

3. Change in

Ownership without

rationale

Converting/ changing the individual properties

in the name of Company/ Trust/ HUF/

Partnership Firm/ LLP by executing a sale deed

at a low price or by way of any type of

agreement, attorney, arrangement (registered or

not) and subsequently in quick succession

further transaction is shown at a considerably

higher amount in favour of third parties.

4. Refusal to share

own Contribution

details

Specifically, in cases where the source is specified

as "Funds from Family" and the Customer fails or

refuses to divulge any information or proof on

where the concerned family member is providing

the funds from.

5. Property

repurchased

Customer buys back a property that he or she

recently sold without justification

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Part D: RFIs that may be considered to be auto generated through a system

S

No

Scenario Indicator/ Trigger

1 Foreclosure by a customer in a

very short period

Loan Accounts with original tenor of more

than 1 year are foreclosed within 6 months

after disbursal of loan.

2 Frequently change in repayment

bank account during currency of

account

Change in the bank account from which

PDC/ ECS are issued, more than 03(Three)

times in last 12 months

3 Negative information about

customer through external

sources/ database or Notice

received from any Agency /

Regulator/ Other Government

Agencies

a. The customer details matched with watch

lists (e.g. UN list, Interpol list etc.)

b. Notice/ Letter from a law enforcement

agencies/ Regulators/ Other Government

Agencies: In case of such notices

received, Principal Officer should be

informed for further action/ advise on

the matter. This notice shall be treated as

an alert to analyse the transactions in

such accounts and if the transactions

appear to be suspicious the same should

be included in the STR along with the

details mentioned in the “Ground of

Suspicion”. The Accounts are to be

reported even if they are closed.

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c. Adverse Media / Public News: Branches

/ offices should check for adverse media

coverage with the names of the Customer.

The names of customers that are pointed

as suspects or accused in such reports

shall be searched and in case of matches

the same may be further internally

analyzed for reporting purposes.

4 Frequent change of Address

without reasonable explanation

Changes in mailing address more than

[twice]* in last 6 months

5 Account having a large volume

of repayments by depositing

DD, Cash and 3rd party Cheques

Total amount of payments through DD, Cash

and 3rd party Cheques valued at more than Rs

5 lacs EMIs/ part payments in last 30 days

6 Transaction more than specified

percentage of the EMI , paid in

cash by a Delinquent Borrower.

Delinquent borrower for more than 6 months

repays the loan in cash beyond [ twice ]* the

original EMI.

7 Cash transactions Multiple related cash transactions which are

broken to just below the following thresholds:

i) Rs. 50,000/- in a day

ii) Rs.10,00,000/- in a month

8 Part payments Part closure to the extent of 10% or more of

the loan amount in one or more occasions

within 6 months.

9 Separate bank accounts Use of Bank A/c’s of Third Parties for

payment of EMIs at more than 6 occasions.

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Part E: Additional List of RFIs pertaining to Builder/Project Loans:

a) Builder approaching the HFC for a small loan compared to the total cost

of the project;

b) Builder is unable to explain the sources of funding for the project;

c) Approvals/sanctions from various authorities are proved to be fake;

d) Builder retains substantial number of the Units in the Project in his or his

family members’ names;

e) Builder has known political connections/ shareholders or directors of his

company are individuals with suspicious background;

f) Frequent Reconstitution of partnership/ proprietorship without

justification;

g) Allotting different numbers to the same flat in different style/order.