Aparampaar

Background:

As per ‘Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023’ dated October 19, 2023 (updated from time to time),  all the NBFCs shall adopt an interest rate policy and model taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest charged for loans and advances. The rate of interest and the approach for gradations of risk and rationale for charging different rate of interest to different categories of borrowers shall be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter. The rates of interest and the approach for gradation of risks shall also be made available on the website of the companies. The information published on the website or otherwise published shall be updated as and when there is a change in the rates of interest.

Objective of the Policy:

To determine the benchmark rates to be used for arriving at the final rate to be charged to the borrowers/ customers for various products financed by the company.

Review of Policy:

Business team shall have the authority to fix their internal pricing under the overall framework of board approved interest rate policy for deciding the spreads to arrive at final rate to be charged to the customers.

Interest Rate Model:

 The Interest Rate benchmark shall be calculated considering the sum of following factors:

1. Base Cost of funds: The Company may borrow funds through various long term and short- term sources including term loans, Non- Convertible Debentures, Working Capital (CC/WCDL), Commercial papers, ICDs etc. Weighted Average cost of all borrowings (including other costs like Processing Fee, brokerage etc.) net of treasury income (income earned over investment of surplus funds) over Assets under Management/ Loan Assets to be considered for benchmark calculation
2. Opex Cost: It includes all fixed and variable operations cost including employee expenses, administration expenses, sales and marketing expenses etc.
3. Risk Premium: Base risk premium to cover business related risks/ expected credit cost (provisions and write-offs) over AUM. The premium will also vary depending on degree of risk involved in lending which includes type of product, general economic condition, mode of repayment by customer, location of customer, income generation capabilities of borrower, credit bureau scores, employment stability indicators,loan tenor, customer category, probability of default, LTV etc. The rate of interest for the same product and tenor by different customers need not to be standardized. It could vary for different customers depending upon consideration of any or combination of above factors. This policy for the Interest Rate model state that the interest rate or other rates and costs charged to the Borrower shall be based on the following broad parameters: Risk profile of the borrower,  Tenor of the Loan,  Cost of borrowing funds by the company, Credit score and credit score trend of the borrower ,  Credit and default risk in the related business or employee segment,  Historical performance of similar kind of customers , Prevailing Interest rate trends in the money market ,  Treasury bill rates and the sovereign yield curve prevalent in financial markets,  Market scenario relating to credit risk premiums,  Internal Cost of doing business,  Interest rate offered by other NBFCs and banks in the country,  Loan processing costs, documentation and maintenance costs,  Cost for loan portfolio and IT costs,  Customer communication costs, and Recovery costs. The company reserves the right to incorporate other factors that may be relevant to each loan case from time to time. The rate of interest and/or charges for the same loan product and same tenor availed during the same period by different customers need not to be standardized as it can vary for different customers based on consideration of any or a combination of above parameters.
4. Base ROA: Base Return on assets is the minimum return expected by the company on its assets.

Other Charges:

Other financial fees and charges for the loans like processing fees, operating charges like cheque bouncing charges, digital signatures facilitation, counselling,late payment charges, restructuring charges, pre-payment / foreclosure charges, charges for issue of statement account etc., would be decided by the respective business teams considering market practices.Legal charges like stamp duty, service tax and other cess would be collected at applicable rates from time to time and would be decided upon by respective business managers assigned for those businesses.

Communication of Interest Rate/ Charges:

Interest rates/ other charges would be intimated to the customers at the time of sanction and of the loan by the Company. The Interest RatePolicyshall be uploaded on the website of the Company and shall be updated as and when there are changes in the rates.