PREAMBLE

This Interest Rate Policy (“Policy”) has been framed in accordance with the provisions of the Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Master Direction, 2023 (as updated from time to time) and other applicable circulars, including Fair Practices Code guidelines.

The Policy sets out the principles and procedures adopted by the Company for determining interest rates, processing and other charges applicable to various loan products offered by the Company. The objective is to ensure transparency, consistency, and fairness in pricing, while taking into account the Company’s cost structures, risk profile, and market dynamics.

OBJECTIVE OF THE POLICY

The key objectives of this Policy are:

• Ensure that interest rates and other charges are determined in a fair, transparent, and non- discriminatory manner.
• Establish a framework for risk-based pricing of loan products.
• Comply with all applicable RBI regulations and guidelines.
• Enable customers to make informed decisions by ensuring adequate disclosure of pricing.
• Maintain consistency in pricing practices across products and customer segments.

SCOPE AND APPLICABILITY

This Policy shall apply to all loan products offered by the Company, including but not limited to personal loans, business loans, EMI-based loans, and digital loans, whether sourced directly or through digital platforms or Lending Service Providers (LSPs).

The Policy covers:

• Interest rates (fixed and floating).
• Annual Percentage Rate (APR).
• Processing fees and other charges;
• Penal charges for delay or default.
• Foreclosure and prepayment charges (if applicable).
• Any other fees or charges associated with lending.

PRINCIPLES OF INTEREST RATE DETERMINATION

The Company adopts a risk-based pricing approach wherein the interest rate applicable to a loan is determined based on multiple factors, including but not limited to the cost of funds, operating expenses, risk premium, and desired return on assets.

The interest rate structure shall be designed to ensure that similarly placed borrowers are treated consistently, while also allowing for differentiation based on risk characteristics.

COMPONENTS OF INTEREST RATE

The final lending rate charged to the borrower shall be determined based on the following components:

a. Cost of Funds: The average cost incurred by the Company for sourcing funds, including interest on borrowings, cost of capital, and other associated expenses.

b. Operating Costs: Administrative and operational expenses incurred in sourcing, processing, servicing, and recovering loans.

c. Risk Premium: An additional margin based on the credit risk associated with the borrower, which may vary depending on the borrower’s profile and loan characteristics.

d. Profit Margin: A reasonable margin to ensure sustainability and growth of the Company.

RISK-BASED PRICING FRAMEWORK

The Company follows a detailed and structured risk-based pricing framework to determine the applicable interest rate for each borrower and loan product. The objective of this framework is to
align pricing with the underlying credit risk, cost considerations, and business strategy, while ensuring fairness, transparency, and regulatory compliance.

The pricing of loans is not standardized across all borrowers and may vary depending on a combination of quantitative and qualitative factors. The Company evaluates each borrower’s risk profile through its internal credit assessment systems, scorecards, and underwriting policies.

A. Key Risk Factors Considered

The interest rate applicable to a borrower shall be determined based on an evaluation of multiple parameters, including but not limited to:

• Creditworthiness of the borrower: Credit score, credit bureau history, past delinquencies, defaults, and repayment behaviour.
• Income and repayment capacity: Stability and adequacy of income, debt-to-income ratio, and overall financial position.
• Employment / business profile: Nature of employment (salaried/self-employed), industry risk, business vintage, and cash flow stability.
• Loan characteristics: Loan amount, tenure, ticket size, repayment structure, and product type (payday, EMI-based, personal or business loan).
• Existing obligations: Current indebtedness, number of active loans, and repayment burden.
• Customer relationship: Past relationship with the Company, repayment track record, and customer behaviour analytics.
• Geographical and demographic factors: Location-based risk, cost of servicing, and market conditions.
• Channel of sourcing: Direct sourcing, digital platform, or through Lending Service Providers (LSPs), including associated acquisition and servicing costs.
• Fraud and operational risk indicators: Device data, behavioral patterns, and other risk signals assessed through digital underwriting models.

B. Product-Based Pricing Approach

Given the nature of the Company’s lending portfolio, different products carry different levels of risk and cost structures. Accordingly, pricing varies across products as follows:

(a) Payday Loans: Payday loans are short-tenure, unsecured loans with relatively higher operational and credit risk. Accordingly, the Company may charge interest in the range of 0.1% to 1% per day, depending on the borrower’s risk profile, tenure, and other relevant factors.

(b) EMI-Based Loans: These loans are typically of longer tenure and structured repayment schedules. The Company may charge interest rates ranging from 18% to 180% per annum (APR), depending on the borrower’s credit profile, risk segmentation, loan tenure, and product structure.

(c) Business Loans: The Company offers Business Loans to meet the working capital and growth requirements. The rate of interest for Business Loans may range from 14% per annum to 36% per annum on a reducing balance basis, subject to periodic review by the management.

The above ranges represent the outer limits, and the actual rate applicable to a borrower shall be determined based on the risk assessment carried out by the Company.

C. Internal Risk Grading and Pricing

The Company may internally classify borrowers into different risk categories (for example: low risk, medium risk, high risk) based on its proprietary scoring models and underwriting criteria. Each risk category may be mapped to a corresponding pricing band.

Higher risk borrowers may be charged higher interest rates to compensate for the increased probability of default and associated costs, while lower risk borrowers may benefit from relatively lower rates.

D. Dynamic Pricing and Review

The pricing framework is dynamic and may be adjusted periodically based on:

• Changes in cost of funds;
• Market competition and industry practices;
• Portfolio performance and delinquency trends;
• Regulatory changes and compliance requirements;
• Business strategy and risk appetite of the Company.

E. Non-Discrimination and Transparency

While the Company adopts risk-based pricing, it shall ensure that:

• Pricing is non-discriminatory within similar risk categories;
• All applicable rates and charges are clearly disclosed to the borrower through the Key Fact Statement (KFS) and loan agreement;
• The borrower is informed of the Annual Percentage Rate (APR) to enable comparison across products.

The Company shall ensure that its risk-based pricing framework is applied consistently and is supported by appropriate documentation and internal controls.

INTEREST RATE TYPES

Fixed Interest Rate: Loans may be offered at a fixed rate of interest, which remains constant throughout the tenure of the loan.

Floating Interest Rate: Where applicable, loans may be offered on a floating rate basis. In such cases:

• The benchmark rate (internal or external) shall be clearly specified;
• The spread over the benchmark shall be disclosed;
• The reset frequency shall be communicated to the borrower;
• Any changes in the interest rate shall be effected prospectively.

ANNUAL PERCENTAGE RATE (APR)

The Company shall disclose the Annual Percentage Rate (APR) to the borrower, which represents the total cost of borrowing on an annualized basis, including interest and all applicable charges.

The APR shall be communicated through the Key Fact Statement (KFS) and loan agreement, ensuring that the borrower has a clear understanding of the overall cost of the loan.

FEES AND OTHER CHARGES

The Company may levy various fees and charges, including but not limited to:

• Processing fees;
• Documentation charges;
• Prepayment/foreclosure charges (where applicable);
• Penal charges for delay or default;
• Any other administrative charges.

All such charges shall be:

• Clearly disclosed upfront in the KFS and loan agreement;
• Reasonable and commensurate with the services rendered;
• Non-discriminatory across similarly placed borrowers.

PENAL CHARGES

The Company shall not levy penal interest. Any charges for delay or default shall be treated as penal charges.

Such penal charges shall:

• Be reasonable and proportionate to the default;
• Not be capitalized (i.e., no interest shall be charged on penal charges);
• Be clearly disclosed in the loan agreement and KFS;
• Not be discriminatory within the same product category.

FORECLOSURE AND PREPAYMENT

In line with RBI guidelines, the Company shall not charge foreclosure or prepayment penalties on floating rate term loans sanctioned to individual borrowers.

For other loans, if applicable, such charges shall be transparently disclosed.

TRANSPARENCY AND DISCLOSURE

The Company shall ensure transparency in all its lending practices.

In this regard:

• The interest rate, APR, and all charges shall be disclosed upfront through the Key Fact Statement (KFS);
• The loan agreement shall clearly specify all financial terms;
• Changes in interest rates and charges shall be communicated to borrowers in advance and shall be applied prospectively;
• The Interest Rate Policy shall be published on the Company’s website (if any).

REVIEW OF INTEREST RATES

The interest rates shall be reviewed periodically based on changes in market conditions, cost of funds, regulatory requirements, and business strategy. Any revision in interest rates shall be approved by the competent authority as per internal governance framework.

GOVERNANCE AND APPROVAL

This Interest Rate Policy has been approved by the Board of Directors of the Company in accordance with the applicable provisions of RBI guidelines. The Board shall have the overall responsibility for ensuring that the Policy is in line with the Company’s business strategy, risk appetite, and regulatory requirements.

The implementation of this Policy shall be the responsibility of the senior management of the Company. The management shall ensure that appropriate internal systems, processes, and controls are in place for consistent application of the Policy across all products and channels, including digital lending platforms and Lending Service Providers (LSPs).

Any deviation from this Policy, including exceptions in pricing beyond the approved framework, shall be subject to approval by the competent authority as defined in the Company’s internal delegation of powers.

The Policy shall be reviewed at least annually, or earlier if required, to incorporate changes in regulatory guidelines, market conditions, cost of funds, or business strategy. Any revisions to the Policy shall be placed before the Board for approval.

The Company shall also ensure that this Policy is adequately disclosed on its website and is accessible to stakeholders, in line with transparency requirements prescribed by the Reserve Bank of India.

REVIEW OF INTEREST RATES AND POLICY

The interest rates shall be reviewed periodically based on changes in market conditions, cost of funds, regulatory requirements, and business strategy.

Any revision in interest rates shall be approved by the competent authority as per internal governance framework.

In addition, this Interest Rate Policy shall be reviewed at least annually, or earlier if required, to ensure continued alignment with applicable RBI guidelines, business objectives, and industry practices. Any changes to the Policy shall be placed before the Board of Directors for approval.