1. BACKGROUND

As per Reserve Bank of India guidelines, Board of each NBFC shall approve an Interest rate model for the Company, considering relevant factors such as cost of funds, margin and risk premium etc. and determine the rate of interest to be charged for loans and advances. Further, the directives state that the rate of interest and the approach for gradation of risk and the rationale for charging different rates of interest for different categories of borrowers should be communicated to the borrowers / customers and shall be available on the website of the companies.

2. PURPOSE

In line with the RBI Directions, the interest rate policy shall define the parameters for determining interest rates for different categories of borrowers.

3. MEANING OF RATE OF INTEREST:

Interest rate shall mean the annualized rate on the credit facilities charged to the borrower by the Company, based on the periodicity of payments, for example, monthly, quarterly, etc. The interest rate shall not include the following (the exclusion list is indicative in nature and shall not be limited to the components below):

• a)Processing Costs
• b)Document Charges
• c) Stamp duty
• d)ExternaI costs
• e)Penalties, including late penalties
• f)Contingent charges
• g)Fore-closure Charges etc.

4. REVIEW OF POLICY:

The Policy shall be reviewed once a year or in between if required due to changes required in the model, for example any addition/deletion of a particular component forming part of benchmark calculation.
ARC (Audit, Risk and Credit Committee) shall have the authority to fix their internal pricing under the overall framework of a board-approved interest rate policy for deciding the spreads to arrive at the final rate to be changed to the customers.

5. RBI GUIDELINES AND REGULATIONS:

• INTEREST RATE MODEL •Jhe Board each NBFqpust approve amintgrest rate model ghat pnsiders the factors mentioned above.
• TRANSPARENCY: The rate of interest and the approach for risk gradation must be disclosed to borrowers in application forms and sanction letters.
• WEBSITE/NEWSPAPER PUBLICATION: The interest rate policy and risk gradation approach are available on the NBFC's website or published in newspapers.
• ANNUALIZED RATES: Interest rates are expressed as annualized rates to ensure borrowers are aware of the total cost of the loan.
• FAIR LENDING PRACTICES: NBFCs are expected to adhere to fair lending practices, including transparent and reasonable interest rates.
• PENAL CHARGES: NBFCs are required to have a Board-approved policy on penal charges or similar charges on loans.

6. INTEREST RATE MODEL

The interest rate charged by the Company for loans and advances is on a fixed rate basis. With reference to the Company's approach for graduations of risk and rationale, the rate of interest for the same product and same tenor availed during the same period by different customers could vary depending upon the combination of various factors such as borrower's profile, type of employment and length of service, primary/ secondary income and growth in business etc. The lending interest rate will be arrived based on the weighted average cost of funds including all charges, risk premium, other costs such as administrative expenses, profit margin, stability, and market information associated with lending activities.
The lending interest rate will be arrived based on the weighted average cost of funds, including all charged, risk premium, other costs such as administrative expenses, profit margin, stability, and market information associated with lending activities.
The Company shall be charging an annualized interest rate on loans and advances extended to customers. The annualized interest shall be communicated explicitly in the loan agreement. Any revision/change in the interest rate/other charges would be affected prospectively only. The rate of interest to be charged for loans and advances will be in the range of 24% to 36% p.a., exceptions to be reported to the Board of Directors of the Company.
The interest shall be amortized with the principal and the monthly due shall be repaid by way of instalments. The company may offer a scheme by which the interest needs to be serviced month on month or on a quarterly basis and the principal repaid at the end of the tenure. Fees and Charges are exclusive of GST and other applicable Taxes, which shall be additionally chargeable as applicable.

7. FACTORS INFLUENCING INTEREST RATES:

• COST OF FUNDS: The cost at which the NBFC borrows money for lending.
• MARGIN: The profit margin the NBFC aims to make on its loans.
• RISK PREMIUM: A higher interest rate charged to compensate for the risk of default or non-repayment.
• BORROWER PROFILE: Factors like credit score, repayment history, and indebtedness, which influence the risk associated with the loan.
• LOAN TYPE AND AMOUNT: Different loan products and amounts may have different interest rate structures
• MARKET CONDITIONS: Overall economic conditions and competition among NBFCs can affect interest rates.

8. OTHER CHARGES

The companymay charge prOCessing fees o cover the cogtdf SOurcjhg, field verification;credjt appraisal etc, Other fees and charges sUchas legal fees, processing fees, Cheque/e-NACH bouncing valuation fees bouncing etc, shall be charged to customers separately. Similarly, other charges such as mandate registration charges, overdue interest, swapping charges, rescheduling charges, post-disbursement charges, prepayment charges, collection charges, statutory charges, etc. shall be levied by the company from time to time. In addition to GST and other cess on the fees and charges shall be collected at the applicable rate from the customers. Any revision in these charges shall be affected prospectively only and the same shall be communicated to customers. The broad range for charging the above referred fees/charges/expenses are explained in this policy.
OVERDUE INTEREST: when there is a delay in the remittance of instalments the company shall charge overdue interest @ 2% p.a., on the instalments outstanding from time to time. This does not prevent the company from taking any legal action and repossessing the asset by issuing a notice to the borrower.
CHEQUE/E-NACH BOUNCING CHARGES/BANK CHARGES: The company may charge a flat amount up to Rs. 500 + applicable GST per instance of cheque/ACH/ECS bounce for loan products.
COLLECTION CHARGES: The company may levy collection charges of an amount not exceeding Rs. 200/- per visit to the customer's place for recovery of dues. In case the customer is residing in a far-off location, the cost incurred for collection would be charged at actual subject to a minimum of Rs. 500/-. Where the officer of the Company from its Regional/Head office visits the delinquent customer, a sum of Rs. 1000/- or actual, whichever is higher, shall be payable by the customer.
FORECLOSURE CHARGES: Where a customer proposes to foreclose a loan account, the company shall levy foreclosure charges. The Company may also charge an additional of 7% on the principal outstanding if the loan is proposed to be taken over/closed from the borrowed funds, subject to defined lock-in period of 3 consecutive months regular payments with all applicable charges.

9. INTIMATION/COMMUNICATION TO BORROWERS:

The Company shall intimate the borrower the loan amount, annualized rate of interest and method of application thereof at the time of sanction of the loan along with the tenure and terms of repayment. In the case of loan facilities Withmoratorium on payment of principal and/or interest, the exact date of commencement of repayment shall also be specified in the loan agreement.
Interest Rate Policy would be uploaded on the website of the company and any change in the benchmark rates and charges for existing customers would be uploaded on the web site of the Company. Changes in the rates and charges for existing customers would also be communicated to them through mail.
The Company shall intimate the borrower, the loan amount and annualized rate of interest (Amort IRR), and were granted through digital lending applications (as defined under the RBI Guidelines on Digital Lending, as amended from time to time), annualized percentage rate (APR), at the time of sanction of the loan along with the tenure and amount of monthly instalment.
Any change in interest Classification: Public rate or any other charge shall be informed to the borrower well in advance and these changes shall be effective only prospectively.
Request for waiver of charges/penal interest/additional interest bank charges/foreclosure charges will normally not be entertained by the Company but in some cases, it will be a sole discretion of the company. The authorized person mayAmendmentsto this lhterestRate PdlicVWill not be effectiveUnlesS some endmehtS I oar)have been approve •and authorized by the board of directors of the Company (or any committee of the board of directors of the Company duly authorized in this behalf). In case of any Amendment to the policy shall stand amended accordingly from the effective date as per the regulatory provisions. The Company shall abide by this Interest Rate Policy and in the same manner it may be applicable to its business.