Policy on Interest Rate Model, Policies and Procedure on determining Interest Rates and other charges
Reserve Bank of India (RBI) had vide its Circular DNBS (PD) C.C. No. 133 / 03.10.001/ 2008-09 January 2, 2009 advised that Boards of Non-Banking Finance Companies (NBFC’s) lay out appropriate internal principles and procedures in determining interest rates, processing and other charges.
Keeping in view the RBI’s guidelines advising the Boards of NBFCs to lay out appropriate internal principles and procedures in determining interest rates, processing and other charges, the following internal guidelines, policies, procedures will be taken into account when determining interest rates or other charges:
- The interest rates applicable to loans will be approved by the Credit Committee, from time to time.
- These rates will be based on the cost of borrowed funds, matching tenor cost, market liquidity, RBI policies on credit flow, offerings by competition, market reputation, cost of disbursements, cost of capital required, inherent credit and default risk in the products and the profile of the customers, industry trends, ancillary business opportunities, future potential, group strength, overall customer yield, nature and value of primary and collateral securities, past repayment track record of the customers, external ratings of the customers etc. The rate of interest may be different for different customers depending upon an evaluation of the factors listed above.
- Interest rates will be intimated to the customers at the time of sanction of the loan and the interest and principal repayment schedule will be made available to the customer.
- The Rate of Interest, Fee and Charges will be expressly stated in the Loan Agreement or the Sanction Letter. The information on Rate of Interest, common fees and charges will be informed to customers through any one or more of the following media: a) Letters or Schedules of charges to the customers; b) Putting up notices at all our branches; c) Through telephone or helplines; d) On the Company’s Website; e) Through designated staff/ helpdesk.
- Processing/ Documentation and other Charges may vary based on the type of loan, the exposure limit, expenses incurred towards sourcing and processing of customers’ loan proposals and generally represent the cost incurred in rendering services to the customers
- The interest shall be deemed payable immediately on the due date as communicated and no grace period for payment of interest is allowed.
- Besides normal interest, the company may levy additional interest for ad hoc facilities, penal interest for any delay or default in making payments of any dues. This additional or penal interest for different products or facilities will be approved by the Credit Committee.
- Besides interest, other financial charges like processing fees, late payments, RTGS/ other remittance charges, etc. may be levied by the company under due communication to the customer, wherever considered necessary. Any revision in these charges would be with prospective effect.
- The Company will ensure compliance with the regulatory requirements if any, while charging pre-payment penalty for early closure of any of the loans.
- Claims for refund or waiver of charges/ penal interest / additional interest will normally not be entertained by the company and it is the sole discretion of the company to deal with such requests if any.
- The interest re-set period will be decided by the company from time to time and communicated to the customer and is subject to change as the situation warrants and is subject to the risk perception of the Credit Committee’s on a case to case basis.
- The interest rate policy will be available on the website and updated from time to time.