INTEREST RATE POLICY

1. OBJECTIVE

The objective of this policy is to:

• Establish a transparent and risk-aligned pricing framework
• Ensure fair, non-discriminatory, and consistent lending practices
• Comply with applicable RBI guidelines for NBFCs
• Balance risk, return, and customer affordability

2. SCOPE

This policy applies to:

• All credit facilities offered by the Company, including short-term and business loans
• All categories of borrowers across retail and MSME segments

3. REGULATORY FRAMEWORK

This policy is aligned with:

• RBI guidelines on Fair Practices Code (FPC)
• RBI directives on charging of interest and disclosure norms
• Applicable NBFC regulatory provisions

4. PRICING FRAMEWORK

The Company adopts a Risk-Based Pricing Approach, wherein the pricing of credit facilities is determined based on an internal benchmark model.

4.1 Internal Benchmark Rate (IBR)

All lending rates shall be derived from an Internal Benchmark Rate (IBR), which reflects:

• Cost of funds
• Operating and administrative expenses
• Expected credit losses
• Desired return on assets

5. RISK PREMIUM DETERMINATION

A risk premium shall be applied over the IBR (Internal benchmark rate) based on borrower-specific and transaction-specific parameters, including:

5.1 Borrower Risk Assessment

• Credit bureau performance
• Repayment track record
• Income and cash flow stability

5.2 Business & Industry Evaluation

• Nature of business and vintage
• Industry risk profile
• Financial strength and turnover patterns

5.3 Loan Structure

• Ticket size
• Tenure (including short-duration loans)
• Product type and repayment structure

5.4 Behavioural & Portfolio Insights

• Historical repayment trends
• Delinquency patterns
• Internal risk grading models

6. FINAL LENDING RATE DETERMINATION

The final lending rate shall be computed as:

Final Lending Rate = Internal Benchmark Rate (IBR) + Applicable Risk Premium

This ensures that pricing remains:

• Dynamic and market-responsive
• Aligned with portfolio risk
• Consistent across similar borrower segments

7. PENAL CHARGES

• Penal charges shall be levied for delays or defaults in repayment
• Such charges shall be:
  • Proportionate to the delay
  • Non-compounding in nature (where applicable)
  • Clearly disclosed in loan documents

8. FEES & CHARGES

The Company may levy:

• Processing Fees
• Documentation Charges
• Late Payment Charges
• Foreclosure / Prepayment Charges (if applicable)

All charges shall be:

• Disclosed upfront in the Key Fact Statement (KFS)
• Communicated transparently prior to disbursal

9. REVIEW & REVISION OF PRICING

• The Internal Benchmark Rate (IBR) shall be reviewed periodically based on:
  • Cost of funds
  • Market dynamics
  • Portfolio performance
• Any revision in pricing shall be applied prospectively

10. TRANSPARENCY & DISCLOSURE

The Company shall ensure:

• Clear disclosure of:
  • Lending rates
  • Fees and charges
  • Penal provisions
• Communication through:
  • Sanction letter
  • Loan agreement
  • Key Fact Statement (KFS)

11. GRIEVANCE REDRESSAL

• Customers may raise concerns regarding pricing or charges through designated channels
• The Company shall resolve grievances within defined timelines
• Escalation mechanism shall be provided as per regulatory requirements

12. REVIEW OF POLICY

• This policy shall be reviewed:
  • Annually
• Any changes shall require Board approval