Aim of adopting these practices is to communicate the annualized rate of interest to the borrower along with the approach for gradation of risk and rationale for charging different rates of interest to different categories of borrowers to have a transparent trade with customers and also to comply with the regulatory guidelines.
- Interest Rate
Appropriate internal principles and procedures in determining interest rates and processing and other charges shall be followed in line with the approved company policies from time to time.
The rate of interest arrived shall be based on the weighted average cost of funds, administrative costs, risk premium and profit margin.
- Gradation of Risk
The decision to give a loan and the interest rate applicable to each loan account shall be assessed on a case to case basis, based on multiple parameters such as the type of asset being financed, borrower profile and repayment capacity, borrower’s other financial commitments, past repayment track record if any, the security for the loan as represented by the underlying assets, loan to value ratio, mode of payment, tenure of the loan, geography (location) of the borrower, end use of the asset etc.
The rates of interest are subject to change as the situation warrants and are subject to the discretion of the management on a case to case basis. The rate of interest informed are annualized rates so that the borrower is aware of the exact rates that would be charged to the account.
The Company shall disclose the interest rates and gradation of risks on its website.