Fair Practice Code & Interest Rate Policy

Preface

Reserve Bank of India (RBI) vide its Circular DNBS / PD / CC No. 95/ 03.05.002/ 2006-07 dated May 24, 2007 advised Non Banking Finance Companies (NBFCs) to lay out appropriate internal principles and procedures in determining interest rates, processing and other charges. Keeping in view the RBI's guidelines and good governance practices, the following internal guidelines, policies, procedures, and interest rate policy have been adopted by the Company for its lending business.

Methodology

The base interest rate will be arrived at based on the weighted average cost of funds, risk premium, other costs such as administrative expenses and profit margin.

The base interest rate applicable to each loan account will be assessed based on multiple parameters like:

• •Nature of lending (unsecured/secured) and tenure
• •Nature and value of securities and collateral offered by customers
• •Risk profile of customer – professional qualification, stability in earnings and employment, financial positions, past repayment track record
• •Inherent credit and default risk in our business
• •Industry trends – offerings by competition

Background

RBI has issued the guidelines on Fair Practices Code for Non-Banking Finance Companies which sets the fair practices standards when dealing with individual customers and to serve as a part of best corporate practice. In view of this the Company has adopted the code to provide transparency in business dealings with its borrowers.

Application of Code

This Fair Practices Code applies to all categories of products and services offered by the Company whether the products and services are provided across the counter, over the phone, through interactive electronic device, on the internet or by any other method.

• •Loan application forms will include necessary information which affects the interest of the borrower for meaningful comparison
• •The company will devise a system of giving acknowledgement for receipt of all loan applications with preferably the time frame for disposal
• •If Company cannot provide the loan, the same shall be communicated with the reason(s) for rejection
• •Company will make available its loan products to all qualified borrowers and shall not discriminate on grounds of sex, caste and religion

• •The company will convey in writing to the borrower the amounts of loan sanctioned along with the terms and conditions including annualised rate of interest
• •The loan sanction letter and all communications shall be in the vernacular language or a language understood by the borrower

General Principles

• •The company will give notice to the borrower of any change in the terms and conditions including interest rates, service charges, prepayment charges
• •The Company will release all securities on repayment of all dues or on realisation of the outstanding amount of loan
• •In the matter of recovery of loans, the company will not resort to undue harassment
• •Company shall not charge foreclosure charges/ prepayment penalties on all floating rate term loans sanctioned to individual borrowers

In case of any complaint/grievance, the applicant/borrowers will have to inform in writing the concerned branch. All disputes in relation to the products and services shall be heard and disposed of within 30 days from the date of receipt of the complete details.