Policy for Determining Interest Rates, Processing and Other Charges
1. INTRODUCTION
The Board of Directors of the Company has adopted the Policy for Determining Interest Rates, Processing and Other Charges (“the Policy”) in accordance with the RBI Directions applicable on the Company, to lay out appropriate internal principles and procedures in determining interest rates, processing and other charges.
This Policy should always be read in conjunction with extant RBI guidelines, directives, circulars and instructions. The Company will apply the best industry practices and ensure the same does not conflict with or violate RBI guidelines.
2. OBJECTIVE
The main objectives of this Policy are to:
- Ensure that interest rates are determined in a manner as to ensure long-term sustainability of business by taking into account the interests of all stakeholders,
- Develop and adopt a suitable model for calculation of a reference rate;
- Enable fixation of interest rates which are reasonable: both actual and perceived;
- Ensure that computation of interest is accurate, fair and transparent in line with regulatory expectations and market practices; and
- Decide on the principles, methodology and approach of charging spreads to arrive at final rates charged from customers.
3. ROLE OF BOARD OF DIRECTORS
The Board of Directors shall have oversight for the interest rate Policy of Sayyam Investments Private Limited. In order to ensure effective implementation of the Interest Rate Policy, the Board may delegate the implementation of the Policy and its operational aspects to the Chief Financial Officer / Finance Head / Executive Director as deemed fit.
4. DETERMINATION OF INTEREST RATES ON LOANS AND CREDIT FACILITY
The Company lends money to its customers mainly through digital platforms via fixed interest rate loans and has various products to cater to the needs of different categories of customers.
The interest rate of each product is decided from time to time, giving due consideration to the following factors:
- Cost of Equity: To run the business, the Company has been infused with equity share capital in huge proportions, and accordingly, the cost of such equity being infused shall be taken into consideration.
- Credit Risk: Risk related to loss of credit due to tenure of loan, nature of facility, ticket size of loan, geographical condition, customer segment, sourcing channels, stability in earnings and employment, financial position, past repayment track record with us or other lenders, external ratings of customers, credit reports, customer relationship, future business potential, results from digital verifications, etc. Therefore, the risk of recovery of loan can be considered to be in the medium to high category, and accordingly, the risk premium would be reckoned.
- Opex Cost: It includes employee expenses, office and infrastructure-related fixed and variable costs, operations costs, sales and marketing expenses, etc.
- Profit Margin: A fair profit margin is added to arrive at the lending rate.
| S. No. | Particulars | Percentage |
|---|---|---|
| 1. | Cost of Funds (A) | XX |
| 2. | Credit Risk (C) | XX |
| 3. | Opex Cost (D) | XX |
| 4. | Profit Margin (E) | XX |
| Rates offered to Customer: | Up to 24% p.a. |
5. PROCESSING FEES / COMMITMENT FEE / OTHER CHARGES
Apart from the interest rate, the Company may levy processing fees/other charges (including stamp duty, service tax/GST, and other cess at the rates as applicable from time to time). Any revision in these charges would be implemented prospectively (with due communication to customers) on its Borrowers for loans sanctioned on a case-to-case basis. Generally, the processing fee charged for processing the loan application will be in the range of 6-25% on the sanctioned loan amount.
Personal Product Processing Fee Bifurcation:
| Product | Upfront | Post Service Fee | ||||
|---|---|---|---|---|---|---|
| Documentation Fee | Technology Fee | Processing Fee | Documentation Fee | Technology Fee | Post Service Fee | |
| 30 days | Yes | Yes | Yes | No | No | No |
| 42 Days | Yes | No | No | No | Yes | Yes |
| 28 Days | Yes | No | No | No | Yes | Yes |
| 60 Days | Yes | No | No | No | Yes | Yes |
| 90 Days | Yes | No | No | No | Yes | Yes |
Mediclaim Processing Fee Bifurcation:
| Product | Upfront | Post Service Fee | ||||
|---|---|---|---|---|---|---|
| Documentation Fee | Technology Fee | Processing Fee | Documentation Fee | Technology Fee | Post Service Fee | |
| 90 Days | Yes | Yes | Yes | No | No | No |
6. ANNUAL PERCENTAGE RATE (APR)
APR is the effective annualised rate charged to the borrower of a digital loan. APR as an all-inclusive cost of digital loans for the borrower shall be disclosed upfront by the Company and shall also be a part of the Key Fact Statement. Generally, the APR will be in the range of 20-350% on the sanctioned loan amount.
7. CONTINGENT CHARGES
The Company may levy a penal charge as mentioned below if the borrower doesn’t service the loan on the due date:
1% per day <=1 days
0.5% per day <=49 days
0% > 49 days
Company shall levy extension fee charges at 10% of the outstanding principal amount + GST if the borrower seeks an extension and the Company, at its sole discretion, approves the request for extension.
8. COMMUNICATION TO CUSTOMER
The Company shall communicate the effective rate of interest to customers at the time of sanction/availing of the loan through the acceptable mode of communication as mentioned in the Fair Practice Code (FPC). The Interest Rate Policy would be uploaded on the website of the Company, and any change in the interest rates and charges shall be updated on the website of the Company.
9. WAIVER / REDUCTION OF CHARGES
The Head of Operations is authorized to waive off/reduce any amount, including Principal amount, Interest Rates, Processing, and Other Charges, at their own discretion, as deemed fit. Further, the Head may delegate this authority in favor of any person.