Interest Rate Policy &
Gradation of Risk
Our interest rate framework as per RBI guidelines for Non-Banking Finance Companies (NBFCs), ensuring transparency and fairness in all lending operations.
Preface
Reserve Bank of India (RBI) vide its Circular DNBS / PD / CC No. 95 / 03.05.002 / 2006-07 dated May 24, 2007 advised Non Banking Finance Companies (NBFCs) to lay out appropriate internal principles and procedures in determining interest rates, processing and other charges. This was reiterated vide RBI's circular DNBS (PD) C.C. No. 133 / 03.10.001 / 2008-09 January 2, 2009 and DNBS.CC.PD.No.320 / 03.10.01 / 2012-13 dated February 18, 2013.
Keeping in view the RBI's guidelines as cited above, and the good governance practices, the following internal guidelines, policies, procedures, and interest rate policy have been adopted by the Company for its lending business.
Methodology
The base interest rate will be arrived at based on the weighted average cost of funds, risk premium, other costs such as administrative expenses and profit margin. The base interest rate applicable to each loan account will be assessed based on multiple parameters:
Nature of Lending
Unsecured or secured lending, and the tenure of the loan.
Securities & Collateral
Nature and value of securities and collateral offered by customers.
Risk Profile
Professional qualification, stability in earnings and employment, financial position, past repayment track record, external ratings, credit reports, and future business potential.
Credit & Default Risk
Inherent credit and default risk in the business, particularly trends with sub-groups and customer segments of the loan portfolio.
Industry Trends
Offerings by competition and prevailing market conditions.
Periodic Review
The base interest rate is reviewed periodically by the ALM Committee to ensure it reflects current market conditions.
Key Terms
The Company shall intimate the borrower loan amount, annualised rate of interest and method of application at the time of sanction of the loan along with the tenure and amount of monthly instalment.
Other charges such as processing fees, additional interest charged on delayed payments and cheque bouncing charges shall be mentioned in the sanction letter / MID / loan agreement.
The rates of interest applicable to each loan account is subject to change as the situation warrants and is subject to the Management's perceived risk on a case-to-case basis.
Claims for refund or waiver of charges / penal interest / additional interest would normally not be entertained by the company, and it is at the sole discretion of the company to deal with such requests if any.
The rates of interest for the same product and tenor availed during the same period by different customers need not be standardised but could be different depending upon any or combination of the factors listed above.
Applicable Interest Rate
The rate of interest charged to our customers is linked to the base rate which is determined based on weighted average cost of funds, risk premium, other costs such as administrative expenses and profit margin. The mark up over the base rate varies from 200 bps to 1300 bps depending on the risk profile of the customer, available security, client's reputation / positioning in the market, past track record, financial standing etc.
Rate Range
12% – 36%
payable monthly
Actual rates vary per customer based on risk assessment. Interest rates are subject to change at the Management's discretion based on prevailing conditions.