INTEREST RATE POLICYBackground:
Reserve Bank of India vide its notification No. DNBS. 204 / CGM (ASR)-2009 dated January 2, 2009 and vide its Guidelines on FPC for NBFCs DNBS.CC.PD.No.266/03.10.01/2011-12 dated March 26, 2012 have directed all NBFCs
Rate of interest:
- To Communicate the annualised rate of interest to the borrower.
- To Communicate the approach for gradation of risk and rationale for charging different rates of interest to different categories of borrowers.
- Make available the rates of interest and the approach for gradation of risks on the web-site of the companies.
EarlySalary Services Private Limited (formerly known as Ashish Securities Private) “Company” intimates the borrower, the loan amount, the rate of interest and any other fees which is applicable for the loan in the Sanction Letter issued at the time of sanction of the loan along with the tenure and the amount.
Approach for Risk Gradation:
- The rate of interest is determined on the basis factors such as weighted average cost of funds, customer acquisition cost, administrative and operational costs, risk premium and profit margin etc. elaborated below;
- The cost of borrowing includes interest cost, arranger fees, processing fees etc. Cost of Borrowing also includes any cost incidental to those borrowings. Further factors such as tenure of borrowing, market liquidity, financing avenues, interest rate methodology also impacts cost of borrowing.
- Operating cost in our business and maintaining the stakeholder’s expectations for a reasonable, market-competitive rate of return;
- Inherent credit and default risk in our business, particularly trends with customer segments of the loan portfolio;
- Subventions and subsidies available, if any
- Risk profile of customer - professional qualification, stability in earnings and employment, financial positions, past repayment track record with us or other lenders, external ratings of customers, credit reports, customer relationship etc.
- Industry trends - offerings by competition
- Besides interest, other fees or charges like processing fees, origination fees, cheque/NACH bouncing charges, late payment charges, charges for issue of statement account etc., would be levied by EarlySalary based on the Agreement executed between the customer and EarlySalary.
- Apart from the charges detailed in above point stamp duty, GST and any levy or cess specified by the government or regulation or authority would be collected at applicable rates from time to time as communicated in the documentation provided.
- Depending on the product the interest rates could be offered on fixed or variable basis and charged on flat or reducing balance method. In case of flat interest rate, the appropriate disclosure required as per regulation shall be made to the customer.
- The interest could be charged on daily or monthly or such other periodicity as may decide by the management, the details of which would be communicated to Customer in the Sanction Letter and Loan Agreement.
- The rates of interest are subject to change as the situation warrants and are subject to the discretion of the management and/or changes to extraneous cost factors which affects the setting up of the interest rate.
- The Company shall mention the penal interest applicable, if any, in the loan agreement.
- Interest rates would be intimated to the customers at the time of sanction / availing of the loan.
- Claims for refund or waiver of such charges/ penal interest / additional interest would normally not be entertained by the Company and it is the sole and absolute discretion of the Company to deal with such requests.
- In case of the change in interest rate or charges for the customer, the same shall be informed to the customer.
- All other regulatory changes in this regard will stand updated in the policy from time to time.
- The Company grants credit facilities only to those customers who it believes have both the intention and the ability to discharge their obligations.
- To execute smooth underwriting process the Company carries out different processes as per Know Your Customer guidelines and allocates credit grade for each customer.
- When assessing credit transactions, the Company focuses on critical principles like history of the Borrower, Financial Leverage, Liquidity and Sources of Cash, education and stability and Profitability of Operations.
- The determination of a customer’s credit grading is generally distinguished by the asset type and its use and is mostly based on four general categories, Character, Capacity, Capital and Collateral.
- The individual assessment criteria for the customer credit grading can be classified into each of these categories. All credit submissions will be classified into following three categories: High, Medium and Low.