INTEREST RATE POLICY

The Reserve Bank of India (RBI) had vide its Circular DNBS / PD / CC No. 95/ 03.05.002/ 2006-07 dated May 24, 2007 advised that Boards of Non-Banking Finance Companies (NBFCs) lay out appropriate internal principles and procedures in determining interest rates, processing and other charges.

This was reiterated vide RBI’s circular DNBS (PD) C.C. No. 133 / 03.10.001/ 2008-09 January 2, 2009, whereby which RBI advised the NBFCs to adopt appropriate interest rate model taking into account relevant factors and to disclose the rate of interest, gradations of risk and rationale for charging different rates of interest to different category of borrowers.

The policies and codes of Finwizz should always be read in conjunction with RBI guidelines, directives, circulars and instructions. The company shall apply best industry practices so long as such practice does not conflict with or violate RBI guidelines.

In order to ensure its standards of transparency, in conformity with the stipulations of the RBI’s directives, the Company has adopted the following interest rate policy for determining Interest Rates, Processing and Other Charges. This Policy applies to clients whose loans are booked in the Company.

Interest Rate Model

• Tenure of the Loan – The interest rate charge will depend on the different kinds of loan; structure of the loan; terms of payment of interest.
• Internal cost loading – The interest rate charged will also take into account costs of doing business.
• Internal and External Costs of Funds – The rate of interest charged is also affected by the rate at which the funds necessary to provide loan facilities to customers are sourced normally referred to as the Company’s external cost of funds.
• Internal cost of funds being the expected return on equity issued, is also a relevant factor. The interest rate charged will also take into account costs of doing business.
• Credit Risk – As a matter of prudence, bad debt provision cost will be factored into all transactions.
• Other Factors – The rate of interest shall be based on the cost of borrowed funds, matching tenor cost, market liquidity, RBI policies on credit flow, offerings by competition, tenure of customer relationship, market reputation, cost of disbursements, inherent credit and default risk in the products and customer per se arising from customer segment, profile of the customers, stability in earning and employment, deviations permitted, ancillary business opportunities, future potential, group strength and overall customer yield, nature and value of primary and collateral securities, past repayment track record of the customers, external ratings of the customers , industry trends, switchover options, canvassed accounts etc.
• The company may adopt discrete interest rate model whereby the rate of interest for same product and tenor availed during same period by customers would not be a standardized one but could be different for different customers depending upon consideration of any or combination of a few or all factors listed out above.
• The annualized rate of interest would be intimated to the customer.
• The interest rates would be offered on fixed, floating and variable basis.
• Interest rates shall be intimated to the customers at the time of sanction/ availing of the loan and the equated instalments/Balloon Payment/Bullet payment apportionment towards interest and principal dues shall be made available to the customer.

Approach for Gradation of Risk

The risk premium attached with a customer shall be assessed inter-alia based on the following factors:

• Profile and market reputation of the borrower,
• Group strength, overall customer yield, future potential, repayment capacity based on cash flows and other financial commitments of the borrower, mode of payment
• Inherent nature of the product, type / nature of facility, refinance avenues, whether loan is eligible for bank financing, loan to value of asset financed,
• Tenure of relationship with the borrower group, past repayment track record and historical performance of our similar clients,
• Type of asset being financed, end use of the loan represented by the underlying asset,
• Nature of lending i.e; secured / unsecured along with value of primary and secondary collateral / security in secured loan,
• Interest, default risk in related business segment,
• Regulatory stipulations, if applicable,
• Any other factors that may be relevant in a particular case.

PROCESSING / DOCUMENTATION AND OTHER CHARGES

• All processing / documentation and other charges recovered are expressly stated in the Loan documents. They vary based on the loan product, geographical location, customer segment and generally represent the cost incurred in rendering the services to the customers.
• The practices followed by other competitors in the market would also be taken into consideration while deciding the charges.
• Processing charges will be charged on case to case basis.
• Goods and Service Tax and other applicable taxes shall be charged as per the guidelines issued by the Government from time to time.

PENAL INTEREST / LATE PAYMENT CHARGES

Besides normal interest, the Company may collect penal interest / late payment charges for any delay or default in making payments of any dues. These penal interest / late payment charges for different products or facilities would be decided by the Company from time to time.

REPOSSESSION OF HYPOTHECATED ASSETS FINANCED BY THE COMPANY:

The Company has a built-in re-possession clause in the loan agreement with the borrowers which is legally enforceable. To ensure more transparency, the terms and conditions of the loan agreement contains provisions regarding:

• • Notice period before taking possession;
  • Circumstances under which the notice period can be waived;
  • The procedure for taking possession of the security;
  • A provision regarding final chance to be given to the borrower for repayment of loan before the sale/auction of the security;
  • The procedure for giving repossession to the borrower; and
  • The procedure for sale / auction of the property.