The Board of Directors and the Management Team of the Company are responsible for implementing the Interest Rate Policy hereinafter detailed in a fair and equitable manner.
The Company shall adopt all the best practices prescribed by RBI from time to time and shall make appropriate modifications, if required, in the Interest Rate Policy to comply with the standards so prescribed.
Cost of Borrowing
The prevailing cost of borrowing applicable for the company to achieve a complete matching of assets and liabilities. The company’s borrowings and all its loans to clients shall be on fixed rates. The pricing of the loan shall be a factor in the risk associated with this.
Cost of Operations
The cost of operations includes manpower cost, infrastructure cost and other administrative costs. Most of these costs are fixed costs and are committed on the basis of budgeted volume of operations. Since these costs come down with increasing volumes and efficiencies, the pricing factor the estimated cost over a reasonable period of time. As a philosophy, the company shall charge clients interest rate only as if it is already a large NBFC and growing at a steady state basis. Thus, the cost of start-up and cost of growth shall be borne by the shareholders.
Portfolio Risk
The portfolio risk is factored on the basis of the type and inherent nature of loans that the company gives, the risk profile associated with this client segment, tenure of relationship with the client, past experience including repayment track record and overall management’s assessment.
Profit Margin
The profit margin is fixed on the basis of the return expected by the shareholders and the risks involved. The profit margin shall be reasonable to attract fresh capital to sustain growth and be benchmarked with comparable companies.
Prevailing Market Practices
The fees and other charges applicable shall depend on the market practices and the cost of providing such services.
The lending rate as well as the fees charged shall be fixed, taking into account the sustainability of various factors and it shall be reviewed periodically by the Asset & Liability Management Committee.
The Company shall intimate the borrower regarding the loan amount, annualised rate of interest, insurance premium, processing fees, penal interest for delayed payment, cheque bounce charges, tenor of the loan and repayment schedule including instalment amount at the time of sanction/disbursement of the loan.