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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. The interest rate will be arrived at based on the following broad parameters:
    a) Risk profile of the borrower;
    b) Interest rate trend prevailing in the money market;
    c) Cost of borrowings;
    d) Interest rate charged by competitors;
    e) Tenure of the borrowing;
    f) Historical track record of the borrower with the CFL;
    g) Operations/Administrative cost and profit margin.
     

  2. The interest rate would be intimated to the borrower at the time of:

    • Final loan offer screen where the borrower can accept or decline the offer &,

    • Sanction/availing of the loan.
       

  3. The rate of interest for the same product and tenor availed during the same period by different borrowers need not be uniform. They could vary for the same or different borrowers.
     

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

  5. Interest is 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. In case of delay in payment of any dues by the borrower, the agreed-upon rate of interest may be enhanced accordingly as a delayed interest rate, and such enhanced delayed rate of interest may be applied on the unpaid liability, indebtedness or part thereof which is due but not paid on the due date for the period it remains unpaid. The aim of the CFL is not to make money out of it but to encourage prompt and timely repayment of dues of the CFL and to deter the borrower from intentional delay in honoring their commitments. However, in deserving cases, the incremental rate on interest may be completely waived off or settled at reduced rates. This will vary on a case-to-case basis and will be decided by CFL only.
     

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

  9. The final lending rate for each loan or various products offered by CFL will be arrived at after taking into account market reputation, prevailing interest rate in the market, credit and default risk associated with the particular borrower/borrowers’ group, the historical performance of the borrower/borrowers’ group, the 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 available to CFL.
     

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

  11. It is important to note that – once the borrower and CFL decide 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 pay the loan amount as per the rate of interest decided by the CFL.

 

3. PROCESSING / DOCUMENTATION AND OTHER CHARGES

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 a case-to-case basis:


Loan Processing Charges: To be charged to the borrower/s for expenses pertaining to processing, documentation, agreement, online convenience fees etc.


Delayed Payment Charges: To be charged on the unpaid dues/liability where the borrower defaults on EMI due date.

Part Prepayment: NIL

Foreclosure: For floating rate loans-Nil, For Fixed rate loans- as decided by the management if applicable
 

Cheque/NACH Bouncing Charges: To be charged to the borrower/s in each instance that any cheque is dis-honored (under any of the payment modes) and consequently represented OR in each instance that a mandate, cheque/ pay order/ demand draft is presented when any instalment/s is/are not received by the CFL by /upon issue of debit instructions under the ECS method or direct debit method or any other payment method (other than the PDC method) as selected by the borrower/s for any reasons whatsoever.


Loan Recovery Charge: This charge will be for the expenses incurred by the CFL to recover the dues, including legal fees, duties, notices, advertisements, etc.

 

GST Charges: As actuals based on the GST norms in India


CFL's aim in levying the above-mentioned charges, other than those mentioned as Loan Processing Charges, is not to make money but to encourage prompt and timely repayment of CFL dues and deter the borrower from intentional delinquency. However, in deserving cases, such additional/penal interest may be completely waived or settled at much lower rates.

4. DISCLOSURE

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

5. 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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