INTEREST RATE POLICY
POLICY REGARDING DETERMINATION OF INTEREST RATE, PROCESSING AND OTHER CHARGES
Reserve Bank of India (RBI) vide its Notification DNBS.PD/CC.No.95 /03.05.002 /2006-07 dated May 24, 2007, issued notification to all NBFCs carrying out the lending business with respect to adoption of policy and procedures on interest rate to be charged to its customers (Notification). Subsequently, RBI vide its Master Circular No. DNBS (PD) CC No.286/03.10.042/2012-13 dated July 2, 2012 consolidated and updated all the instructions relating to the Fair Practise Code for NBFCs.
The Notification directs all NBFCs to adopt a policy and process in determining the interest rate, processing fee and other charges in providing various loan products to its customers. (Interest Rate Policy)
I. OBJECTIVE OF THE NOTIFICATION
The Notification has the following objectives:
- Promote fair practices by adopting clear principles and rationale for the interest rate charged and other charges recovered from the customers
- Increase transparency in the interest rate and adopt policy whereby overcharging the customers is avoided.
- Foster customer confidence in the Company
II. APPLICABILITY
- The Notification applies to all loan products offered by the Company.
- The Company will continue to evaluate multiple products to meet the financing requirements of its customers.
- The Interest Rate Policy will be applicable and shall continue to be applicable to any product that is developed and provided by the Company to its customers.
III. OBJECTIVE OF THE INTEREST RATE POLICY
- To develop an interest rate model to form a guiding principle for rate of interest charged and other charges recovered from customers for all loan products.
- To be compliant with extant guidelines issued by RBI with respect to the interest rate charged and other charges recovered from the customers.
- To formulate a policy and process to avoid charging relatively excessive interest rate to the customers.
IV. INTEREST RATE MODEL
- The Company shall adhere to the following interest rate model:
- The model shall be based on the following assumptions:
- Cost of debt is the rate at which the Company procures debt for on-lending purposes. The rate shall be treated as indicative and shall vary depending on the market conditions, performance of the company and the rates at which the creditors shall be willing to give the debt.
- Loan loss provisioning shall be in compliance with the guidelines issued by RBI from time to time and shall be dependent on the provisioning requirements for NBFC.
- All the rates are indicative.
V. INTEREST RATE STRUCTURE
The Company currently follows the below mentioned interest rates for different products.
| Particulars | New Vehicle loan | Used Vehicle Loan | Unsecured Business Loan | Secured Business loan | Hypothecation loan | Gold Loans | LAS | LAP | Other loans |
|---|---|---|---|---|---|---|---|---|---|
| Min Interest rate | 15% | 17% | 17% | 17% | 17% | 18% | 17% | 18% | 15% |
| Max Interest rate | 24% | 24% | 26% | 26% | 26% | 28% | 24% | 24% | 30% |
| Charge Name | MSME Loan | Equipment/Machinery Loans | Gold Loan | Vehicle Loans | Loan Against Shares | Personal Loans | Loan Against Property |
|---|---|---|---|---|---|---|---|
| Application Fee | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
| Loan Processing Fee | Slab Rate Ranges from 2% to 2.50% | Slab Rate Ranges from 2% to 2.50% | Nil | Slab Rate Ranges from 1% to 2.15% | Slab Rate Ranges from 0.50% to 2.50% | Slab Rate Ranges from 0.50% to 2.50% | Slab Rate Ranges from 0.50% to 2.50% |
| Cheque/ECS bounce charges (per bounce) | Rs.750 | Rs.750 | Rs.750 | Rs.750 | Rs.750 | Rs.750 | Rs.750 |
| Interest on Late Payment of EMI (per month on overdue EMI amount/Interest amount) | 3% | 3% | NA | 3% | 3% | 3% | 3% |
| Swap Charges | Rs.500 | Rs.500 | Nil | Rs.500 | Rs.500 | Rs.500 | Rs.500 |
| Statement of Account Charges | Rs.250 | Rs.250 | Rs.250 | Rs.250 | Rs.250 | Rs.250 | Rs.250 |
| Document Retrieval Charges | Rs.750 | Rs.750 | NA | Rs.750 | Rs.750 | Rs.750 | Rs.750 |
| Copy of Property/Security Papers | NA | NA | NA | NA | Rs.750 | NA | Rs.750 |
| NOC Revalidation Charges | NA | NA | NA | Rs.500 | NA | NA | NA |
| Additional Repayment Schedule | Rs.250 | Rs.250 | NA | Rs.250 | Rs.250 | Rs.250 | Rs.250 |
| Sanction Letter | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
| Valuation Charges | Nil | Nil | Nil | Rs.750 | Nil | Nil | Rs.2500 and above |
| Pre-Closuer Charges | 4% | 4% | Nil | Before 6 months 6 % and 4% afterwards | 4% | 4% | 4% |