Interest Rate Model and Approach

1. INTRODUCTION
 

To ensure transparency, in conformity with the stipulations of the Reserve Bank of India’s (hereafter referred to as ‘RBI’) directives, Chinmay Finlease Limited (“CFL”) has adopted the following interest rate policy:

2. INTEREST RATE MODEL AND APPROACH FOR GRADATION OF RISK

The interest rate to be charged to the borrower for the loans will be decided keeping in view the RBI’s guidelines.
 

1. Interest rate will be arrived based on the following broad parameters:
   a)    Risk profile of the borrower;
   b)    Tenor of the Loan;
   c)    Cost of borrowing funds – Internal as well as external;
   d)    Risk associated with credit and probability of default of the borrower;
   e)    Credit Bureau score of the borrower;
   f)    Interest rate trend prevailing in the money market;
   g)    Interest rate offered by other NBFCs in the industry;
   h)    Historical track record of the borrower with the CFL;
   i)    Operations/Administrative cost and profit margin; and 
   j)    Other factors that may be relevant in each case.

2. Interest rate would be intimated to the borrower at the time of:
   a)    Final loan offer screen where borrower can accept or decline the offer &,
   b)    Sanction / availing of the loan.

3. The rate of interest for the same product and tenor availed during same period by different borrower need not be uniform. It could vary for the same or different borrower based on risk profile and credit assessment criteria’s.

4. The interest rates will be offered on fixed rate basis.

5. Flat Interest rate will be applicable and will be calculated on the loan amount sanctioned to the borrower.

6. The interest shall be payable immediately on the due date as mentioned in the loan agreement as communicated.

7. No interest is payable on credit balance in borrower’s account.

8. The final lending rate for each loan or various products offered by CFL will be arrived at after considering market reputation, prevailing interest rate in the market, credit and default risk associated with the borrower/borrowers’ group, historical performance of the borrower/borrowers’ group, profile of the borrower/borrowers’ group, tenure of relationship with the borrower/borrowers’ group, the administrative cost and profit margin, etc. Such information is gathered based on information provided by the borrower/borrowers’ group, credit reports, market intelligence and any other information as available to CFL.

9. The lending rate of CFL should not be less than the lowest of the rate of interest charged on the funds borrowed by CFL. The lending rate is subject to change as per the discretion of management of CFL based on the variables as set by the management of CFL.

10. It is important to note that – once borrower and CFL decides via signed loan agreement/Key fact statement the applicable rate of interest on the loan amount, then the beneficiary of the loan amount/receiver shall be bound to payout the loan amount as per the rate of interest decided by the CFL.

11. Risk-return pricing is a fundamental tenet of risk management. CFL utilizes advanced machine learning algorithms to assess customers' overall financial stability and credit bureau scores, determining interest rates that range from 28% to 36.50% annually.

12. CFL will communicate annualized rate of Interest to all its borrowers so that its borrowers are aware of exact rates that will be charged to respective loan facilities. The interest could be charged on monthly EMI basis as provided in the KFS and loan documents agreed with the customer.
    Further, in respect of loans falling within norms applicable to digital lending, annualized percentage rate (“APR”) i.e. the effective annualized rate charged to the borrower of a digital loan, shall be the all-inclusive cost to the borrower, including interest charges, processing fee, document charges, online convenience charges, etc., but excluding taxes, contingent charges like penal charges, late payment charges, insurance premium. The APR shall be disclosed upfront by CFL to each borrower and shall also be a part of the Key Fact Statement issued by CFL in respect of each digital loan under the Guidelines on Digital Lending issued by the Reserve Bank of India.

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3.    PROCESSING / DOCUMENTATION AND OTHER CHARGES

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The processing/ documentation and other charges recovered will be expressly stated in the Loan Agreement/Key fact statement.

The CFL may levy any of the below mentioned fees, charges, etc. to the borrower on case-to-case basis:

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​The aim of CFL to levy the above-mentioned charges other than those mentioned as Loan Processing/Document/Convenience is to ensure companies operational expenses, payment gateway charges, KYC, bureau charges, risk premium, etc. can be managed efficiently with high quality standards.

Penalty Charges - Our policy on penal charges complies with RBI guidelines to ensure transparency and fairness. Penal charges will be calculated based on the number of days the loan remains overdue and will not be imposed as penal interest or capitalized. These charges will be reasonable, uniformly applied within the same loan category, and outlined in our board-approved policy. Full details of the charges will be disclosed in the loan agreement, included in the Key Fact Statement (KFS). Borrowers will be notified of applicable charges during reminders for overdue payments, ensuring clarity and compliance with regulatory standards.

Legal Fees - CFL may add Legal charges in case of loan default. These legal charges include, but are not limited to, attorney fees, court costs, and other related expenses. The added legal charges shall become immediately due and payable, and shall be considered part of the total outstanding debt owed by the Borrower.

Insurance Fees - Insurance is an additional feature which may be offered by CFL through its partner channel from time-to-time to its borrowers. This may be optional in nature, and customers can opt based on their own discretion.
 

Deferred Interest - Deferred interest refers to the interest accrued but unpaid within the agreed repayment period, leading to its addition to the outstanding loan amount.

4.    COOLING OFF PERIOD

The customer will be provided with a clear option to exit a digital loan by repaying the principal and the applicable proportionate APR without incurring any penalties during this time. The cooling-off period will be of 3 days. 

5.    DISCLOSURE

Appropriate disclosure regarding this Interest Rate Policy shall be made on the Company website.

6.    POLICY REVIEW

This policy shall be reviewed and updated periodically for any changes and be approved by Board of the Directors.
 

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