Interest Rate Model

Ekagrata Finance Private Limited (hereafter referred to as the “Company”) is a Non- Banking Financing Company (“NBFC”) registered with the Reserve Bank of India (“RBI”). The Company was incorporated in the year 2018 with an aim to provide loans, mainly to the unbanked segments of white and blue collar employees.

1. Regulatory Framework

IThe Reserve Bank of India’s (“RBI”) Master Direction – Non-Banking Financial Company – Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016 bearing circular no. DNBR.PD.007/03.10.119/2016-17 dated September 01, 2016, (as amended from time to time) directs the Boards of all Non-Banking Finance Companies (NBFCs) to approve an Interest rate model for the NBFC and also to make available the rates of interest and approach for gradation of risk on the website of the NBFCs.

Based on the above mentioned directives of the RBI, this Interest Rate Policy (“Policy”) of Ekagrata Finance Private Limited (hereinafter referred to as “Company”), has been developed for the determination of interest rates.

2. Objectives

The main objectives of this Policy are to:

  1. ensure that interest rates are determined in such manner so as to ensure long term sustainability of business by taking into account the interests of all customers of the Company;
  2. develop and adopt a suitable model for calculation of the rate of interest;
  3. enable fixation of interest rates which are reasonable to all customers;
  4. ensure that computation of interest is accurate, fair and transparent in line with the statutory requirements and industry practices;
  5. charge differential rates of interest linked to the risk factors as applicable; and
  6. facilitate transition to income recognition norms that may be stipulated by RBI in future and adoption of best practices.

3. Interest Rate Model

    3.1. The interest rate charged by the Company to the customer shall be based on the following broad parameters:

    1. Risk profile of the borrower;
    2. Tenor of the Loan;
    3. Cost of borrowing funds – Internal as well as external;
    4. Credit and default risk in the related business segment;
    5. Historical performance of similar kind of customers;
    6. Prevailing Interest rate trends in the money market;
    7. Treasury bill rates and the sovereign yield curve;
    8. Spreads between the sovereign and the AAA corporate bonds;
    9. Prevailing Base Rate of major commercial banks;
    10. Market scenario relating to credit risk premia/default premia including CDS spreads;
    11. Internal Cost of doing business;
    12. Interest rate offered by other NBFCs in the industry; and
    13. Other factors that may be relevant in each case.

    3.2. The rate of interest for the same loan product and same tenor availed during the same period by different customers may vary for each customer based on consideration of any or a combination of above mentioned criteria.

    3.3. The interest rates offered can be on fixed or variable basis.

    3.4. The interest rate could range between eight to thirty-six percent on reducing the balance rate method. The Company may charge the above mentioned rate range on Flat rate method considering the Tenure, Cost of fund and other relevant factors from time to time.

    3.5. The interest reset period for variable rate loans shall be decided by the Company from time to time.

    3.6. The Company shall charge such rates of interest either on a monthly or a quarterly basis for each product/segment.

    3.7. The rate of interest shall be intimated to the customers at the time of sanction/availing of the loan and the EMI apportionment towards interest and principal dues would be made available to the customer.

    3.8. The interest shall be deemed payable immediately on the due date as communicated and no grace period for payment of interest is allowed.

    3.9. Besides normal interest, the Company may levy additional/penal interest for delay or default in making payments of any dues. Such additional or penal interests for different products or facilities shall be determined by the respective business/product heads, and the customers shall be provided with a prior intimation regarding the same.

    3.10. Any change in the rate of interest and the related charges would be prospective in effect and intimation of change of interest or other related charges would be given to customers in a mode and manner as may be deemed fit by the Company.

    3.11. Besides interest, the Company may levy other financial charges on the customers such as processing fees, origination fees, cheque bouncing charges, late payment charges, re- scheduling charges, pre-payment / foreclosure charges, part disbursement charges, cheque swap charges, security swap charges, charges for issue of statement account, customer care, credit assessment, cash handling, ECS/ Direct Debit/ ACH mandate registration/ lodgement/ handling or for any other service provided by the Company or cost incurred by the Company for the provision of services related to the loan granted to the customers.

    3.12. BAdditional charges such as stamp duty, service tax and other cess would be collected by the Company from the customer at applicable rates from time to time. Any revision in these charges would be prospective in effect. These charges for different products or facilities would be decided by the respective business/product heads in consultation with the finance and legal heads of the Company.

    3.13. These fees and charges may vary based on asset/commodity financed, exposure limit, expenses incurred at the point of sale, customer segment and generally represent the costs incurred in rendering the services to the customer.

    3.14. All such fees and charges shall be clearly communicated to the customer either by way of printing on the sanction letter or by publishing on the website of the Company.

    3.15. While deciding the charges, the practices followed by the competitors in the market would also be taken into consideration.

    3.16. The Company may also levy and collect charges and penalties for prepayment/ foreclosure of loan by the customer, for delay or late payment of loan instalment and other dues to the Company and bouncing of ECS/ Direct Debit/ ACH.

    3.17. The Company may, at its sole discretion, allow the prepayment/foreclosure of the Loan Amount subject to certain conditions and on payment of prepayment/foreclosure penalties by the Borrower.

    3.18. The minimum number of instalments post which pre-payment/ foreclosure is allowed may vary based on products & tenure of loan and shall be specified in the sanction letter.

    3.19. Claims for refund or waiver of charges / penal interest / additional interest would normally not be entertained by the Company and it is at the sole discretion of the Company to deal with such requests.

    3.20. Any revision in the Company’s interest rates applicable to business would be reviewed by the finance and legal heads and recommended to the CEO for approval.

4. Gradation of Risk

    4.1. The Company hereby retains the sole discretion to calculate and decide the risk premium for every transaction, on a case to case basis. The Company shall, for the purpose of grading the risk, take into account factors such as nature of loan, credit worthiness of the customer, nature of security, customer’s profile, repayment capacity, customer’s other financial commitments, past repayment, tenure of the loan, location of the customer etc.

    4.2. The Company shall also, during the course of determining the gradation of risk and calculating the rate of interest and other charges, consider the rate offered by the Company’s competitors in the market.