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V.1.1.2022-23
VERSION CONTROL
| Version# | Purpose/Change | Modification Date | Effective Date |
|---|---|---|---|
| 1.4 | Policy for Determining Interest Rates and Other Charges. | 17th April,2024 | 17th April,2024 |
A Board Meeting has been conducted at Payme India Financial Services Private Limited, Noida Office on 17th day of April, 2024 wherein the Board of Directors and other stake holders had their participation for the subjected cause
| Reviewers & Approvers | ||
|---|---|---|
| Name | Designation | Role of an Individuals |
| Mahesh Kumar Shukla | CEO | Reviewer |
| Manav Munjal | Board Member | Approver |
| Gaurav Dwivedi | Board Member | Approver |
| Neelam Pal | Company Secretary | Reviewer |
1. PREAMBLE
As per Reserve Bank of India (“RBI”) Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 (“Master Direction’’), the Board of Directors of all Non-Banking Financial Companies (“NBFCs”) shall adopt an Interest Rate Model considering relevant factors such as cost of funds, operating costs and risk premium etc., and determine the rate of interest to be charged for loans and advances.
In view of the same, PayMe India Financial Service Private Limited (“PMIFS” or the “Company”) has formulated this Policy on Interest Rate and Charges (“Policy”) to enable establishment of interest rates and to be used for different customer segments and for different lending products offered by the Company.
2. OBJECTIVES OF THE POLICY
The objective of this Policy is to standardize the methodology used to charge interest rate and charges for different customer’s segments and loan products. This policy provides the basis and guidance for determination of interest rates, penal charges, prepayment charges, processing charges etc. to be charged by PMIFS. This policy has been updated by PMIFS from time to time to align it with the Fair Practices Code and other applicable regulatory requirements prescribed by the Reserve Bank of India (RBI).
3. IMPLEMENTATION OF THE POLICY
The Board of Directors shall have oversight on PMIFS’s Policy on Interest Rate and Charges. The Board may delegate certain operational aspects to such member as deemed fit by the Board of Directors in order to ensure effective implementation of the Policy on Interest Rate and Charges. Such member will determine the pricing range for different customer segments and products in accordance with this Policy on Interest Rate and Charges and recommend to the Board for its approval.
The interest rates to be charged for different segments and customers will be decided by the business/credit teams to be consistent with the range of rates approved by the Board. The business/credit teams will take into account relevant factors, including the risk of the applicant defaulting on the loan, prevalent market conditions, competition and ability of the target customer base to service such interest while determining the rate to be charged within the range approved by the Board.
4. FAIR PRACTICES CODE
All aspects such as collection, communication, revision etc. pertaining to the interest rate model shall be undertaken as per the Board approved Fair Practices Code of the Company. The clauses outlined in this policy are formulated in line with Fair Practices Code as approved by the Board .
5. INTEREST RATE MODEL
PMIFS lends money to its customers through fixed rate loans, PMIFS currently does not provide floating rate loans and this Policy on Interest Rate and Charges will be revised appropriately in the event PMIFS proceeds to provide such loans in the future.
The interest rate model shall ensure compliance with applicable laws and directions given by Reserve Bank of India and that the rates are commensurate with the risks posed by the borrower.
PMIFS being an NBFC lends money through various products to cater the needs of different categories of customers. The interest rate for different customer segments and loan products is established by the Company based on the following factors:
| Sr. No. | Factors | Description | ||||||||||
| 1. | Cost of funds | This represents the interest rate and other cost associated with the borrowing of capital which is used for lending operations. It is representative of what the company pays to source its funds in the form of debt. This also includes the cost and expenses of raising such funds, such as payment of placement fees, brokerage, processing fees, listing fees etc. The Company also has an equity portion and the cost of such equity is considered to arrive at the weighted average cost of capital. |
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| 2. | OPEX (Operating Expenses) | It encompasses all expenses borne by the company in order to run its business including but not limited to employee expenses, branch related fixed and variable costs, sales and marketing expenses, etc. It does not include any fees that the Company pays to DSAs/LSPs for sourcing a loan transaction. | ||||||||||
| 3. | Risk Premium | Prices may vary depending upon internal assessment of likelihood of delinquency or potential loss from customer segments basis business, customer segment, geography, sourcing channel and other factors as illustrated in para 6 below. Risk Premium will also consider the volatility of credit risk for each price point. | ||||||||||
| 4. | Profit Margin |
Fair profit margin is added to arrive at the lending rate.
|
6. APPROACH FOR GRADATION OF RISK
The following factors are relevant for the purpose of determining risk premium:
a. Tenor
The weighted tenor of the segment is also considered as an input to arrive at the annualized loss projections.
b. Risk Factors
Multiple Risk Factors are considered to arrive at the final pricing for a segment, mentioned below-
c. Other Risk Factors
The rate of interest for the same product and tenor availed during the same period by different customers need not be the standardized one. It could vary for different customers depending upon consideration of all or any combination of above factors. The indicative interest rate to be charged from the borrowers is currently as mentioned in the Annexure-1.
The applicable interest rates would be reviewed annually and as and when needed depending upon changes in the factors considered for determination of the interest rate. Such review may be delegated by the Board to the Risk Management Committee or such other committee/ authority as the Board may deem fit.
7. PENAL/ OVERDUE CHARGES:
The Company may collect penalty for non-compliance of material terms and conditions of loan contract by the borrower only by way of penal charges and the same shall not be collected as penal interest that is added to the rate of interest charged on the loan amount. Further, late payment fees may be levied on a borrower who fails to make loan due payment by the due date or there is a bounce instance received from the registered bank account for auto debits.
The penal charges shall not be capitalized by the Company i.e., no further interest computed on such charges. However, this will not affect the normal procedures for compounding of interest in the loan account.
The Company shall also not introduce any additional component to the rate of interest charged to the borrower and shall ensure compliance with the above.
The quantum of penal charges shall be reasonable and commensurate with the non-compliance of material terms and conditions of loan contract without being discriminatory within a particular loan/product category.
The Company shall not, under any circumstances, levy higher penal charges to individual borrowers, who have availed the loan for purposes other than business, than non-individual borrowers for similar non-compliance of material terms and conditions.
Disclosure requirements: The quantum and reason for penal charges shall be clearly disclosed by the Company to the customers in the loan agreement and most important terms & conditions/Key Fact Statement (KFS) provided to them (pursuant to RBI Guidelines on Digital Lending dated September 02, 2022 and RBI Circular dated April 15, 2024 on Key Fact Statements for Loans and Advances) and the loan agreement. The same shall be displayed on websites of NBFCs under Interest rates and Service Charges.
Further, whenever reminders for non-compliance of material terms and conditions of loan are sent to borrowers, the Company will communicate the penal charges associated with the same to the Borrower. Any instance of levy of penal charges by the Company shall be communicated to the borrower along with the reason thereof.
The penal charges/ late payment fees levied by the Company on the customer is provided in Annexure-2.
8. PRECLOSURE/FORECLOSURE CHARGES:
The Company may, at its sole discretion, allow the prepayment of the loan amount subject to certain conditions and on payment of charges by the customer. This will be documented clearly in the financing documents, including the loan agreement. However, the company does not charge any preclosure/foreclosure charges from the customer.
9. OTHER FEES/CHARGES:
The Company generally charges a fee on the loan amount depending on the category of loan and risk associated in the form of processing fees/ non-refundable upfront fee. These charges would be decided or revised by the member with the approval of the board by way of amendment to existing product approval document.
The fees/charges charged by the Company on the Customer is provided in the Sanction Letter and the KFS provided to the customer.
Other costs and charges such as service tax and other cess would be collected at applicable rates.
All such charges will be disclosed clearly in the loan documentation with the borrower, including in the key facts statement and shall not be charged unless disclosed in the Key Facts Statement (provided pursuant to RBI Guidelines on Digital Lending dated September 02, 2022 and RBI Circular dated April 15, 2024 on Key Fact Statements for Loans and Advances).
PMIFS will ensure that any fees, charges, etc., payable to any lending service providers in respect of the digital loans provided by PMIFS are only paid directly by PMIFS and are not charged by any lending service provider to the borrower directly.
10. ANNUALIZED RATE
The Company 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 basis for different products / segments as provided in the 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 processing fee, verification charges, maintenance charges, etc., but excluding contingent charges like penal charges, late payment charges. The APR shall be disclosed upfront by PMIFS to each borrower and shall also be a part of the Key Fact Statement issued by PMIFS in respect of each digital loan under the Guidelines on Digital Lending issued by the Reserve Bank of India. APR will be capped to 36 to 54% across all segments and products
11. CEILING ON INTEREST RATE
The Company will ensure that the applicable rate of interest to any borrower should not exceed the maximum rate fixed for each product offered by the Company. The interest rate charged to the customer will not exceed 54% per annum.
12. COOLING OFF PERIOD
The customer will be provided with a clear option to exit a loan by repaying the principal and the applicable proportionate APR without incurring any penalties during this time. The cooling-off period will be at least three days for loans having tenor of seven days or more and at least one day for loans having tenor of less than seven days. Currently the cooling period is 3 days across all products.
13. COMMUNICATIONS
A. PMIFS shall communicate to the customer upfront at the time of loan sanction:
i. Key Fact Statement (KFS) to the borrower before the execution of the contract in a standardized format for all digital loans as per the Digital Lending Guidelines and RBI Circular on Key Facts Statement (KFS) for Loans & Advances dated April 15, 2024, as applicable.
ii. The amount of loan sanctioned along with the terms and conditions including annualized rate of interest and annualized percentage rate (inclusive of all costs and charges other than the contingent charges like penal charges and late payment charges etc).
iii. Details of the penal charges / overdue charges and the other charges payable by the customers in relation to their loan account and method of application thereof and late payment fees for late repayment of loan would be mentioned in bold in the loan agreement.
B. Changes to the Interest Rate/ Charges
Any change in any of the terms and conditions, including annualized rate of interest or any charges, shall be communicated to the customer through electronic media or any other form of communication prior to implementation.
PMIFS shall also ensure that changes in interest rates and charges are affected only prospectively and this should be duly recorded in the loan agreement/ terms and conditions of financing.
14. DISCLOSURE ON THE WEBSITE
The Policy which contains the rates of interest pertaining to each product category offered by the Company as well as Approach for Gradation of Risk shall be placed in the website of the Company. any change in the rates and charges for existing customers shall also be uploaded on the website of the Company.
15. REVIEW OF THE POLICY
The Policy shall be amended or modified with approval of the Board. The Policy shall be reviewed by the Board on an annual basis. Consequent upon any amendments in RBI guidelines or any change in the position of the Company, necessary changes in this Policy shall be incorporated and approved by the Board considering recommendations made by the Risk Management Committee/ other relevant board committee.
Notwithstanding anything contained in this Policy, in case of any contradiction of the provision of this Policy with any existing legislations, rules, regulations, laws or modification thereof or enactment of a new applicable law, the provisions under such law, legislation, rules, regulation or enactment shall prevail over this Policy.
ANNEXURE 1
1. Bullet Loan:
Eligibility Criteria:
| Bullet Loan Criteria | Minimum | maximum |
|---|---|---|
| CIBIL Vision Score | 600 | 900 |
| Age | 21 Years | 58 years (EOT) |
| tenure | 15 Days | 45 Days |
| Loan Amount | 2000/- | 30000/- |
| rate oif Interest | 0.1% per day | 0.15% per day |
2. Personal Loan:
Eligibility Criteria: Below mentioned are the eligibility criteria to both segment customers, i.e. salaried and self-employed.
Salaried: –
| Norms | Minimum | Maximum |
|---|---|---|
| CIBIL Vision Score | 600 | 900 |
| Applicant Age | 21 Years | 58 Years (EOT) |
| Loan Tenure | 3 Months | 36 Months |
| Loan Amount | 25000/- | 300000/- |
| Monthly Income (Net Take Home) | 20,000/- | – |
| Salary credits in bank account | 3 | – |
| Bank A/c statement | 3 Months | |
| Rate of Interest | 0.1% per day | 0.15% per day |
FOIR: upto 75%
Self Employed: –
| Norms | Minimum | Maximum |
|---|---|---|
| CIBIL Vision Score | 600 | 900 |
| Applicant Age | 21 Years | 58 Years (EOT) |
| Loan Tenure | 3 Months | 36 Months |
| Loan Amount | 25000/- | 300000/- |
| Annual Net Income as per ITR | 3,00,000/- | – |
| Bank A/c statement | 6 Months | |
| Rate of Interest | 0.1% per day | 0.15% per day |
Proof of Business (Registration):- GST registration certificate/ Utility bill (latest 3 months) / Trade license/ Sales tax certificate/ Udyam Aadhar/ Any business registration certificate.
ANNEXURE 2
Table for Penal Charges
| Sl. No | Penal Charges in case of Bullet Loans | Penal Charges in Case of EMI Loans |
|---|---|---|
| 1. | In case of delay in payment of amount due, Penal charges shall be @10% on Principal o/s subject to a minimum of INR 100 and a maximum of INR 3, 000 excluding taxes. | In case of delay in payment of amount due, Penal charges shall be @10% on Principal o/s subject to a minimum of INR 100 and a maximum of INR 3, 000 excluding taxes. |
Bounce Charge/ Penal Charges Grid:-
Minimum criteria to levy bounce/ penal charges will be: Rs. 100/- or 10% plus applicable taxes whichever is lower.
Maximum criteria to levy bounce/ penal charges will be: Rs. 3,000/- or 10% plus applicable taxes whichever is lower.
| Bounce Charge | |
|---|---|
| Amount | Bounce Fee (excluding GST) |
| 0-2000 | 100 |
| 2001-5000 | 200 |
| 5001-8000 | 300 |
| 8001-10000 | 400 |
| 10000+ | 500 |
Criteria, applicability, exclusion and quantum for above mentioned charges
1. Bounce changes are incident based i.e. whenever the repayment instrument (NACH/ECS/PDC) get bounced on the date of presentation of such instruments.
2. These bounce charges are being levied by the Lender.
3. The presentation of the instrument are as per the NPCI guidelines which is being amended on time to time.
4. As per the guidelines issued by NPCI, the above mentioned instrument can be presented once in a month and can be re-presented only twice in a month.
5. Minimum criteria to levy bounce/ penal charges will be: Rs. 100/- or 10% plus applicable taxes whichever is lower.
6. Maximum criteria to levy bounce/ penal charges will be: Rs. 3,000/- or 10% plus applicable taxes whichever is lower.
7. The penal charges mentioned in point no 5 and 6 are applied to an individual customer on a particular loan bearing unique loan number or account and that too only once in a tenure till the date when the final repayment has been done by the customer i.e. the customer may only be able to take new loan only when he has paid all his due including the principal plus the normal interest, any other penal/default charges as levied on him till the date of actual payment.