Interest Rates Policy

Transparent APR model with risk-based pricing approved by Board of Directors.

Company Overview

FriendLoan Technologies Private Limited is a technology company and all loans are processed in its subsidiary Sampathi Credits Private Limited, an NBFC registered under RBI.

Background

RBI has vide circular DNBS.CC.PD.No.266/03.10.01/2011-12 dated 26 March 2012 directed NBFCs to have a documented Interest Rate Model Policy approved by the Board of Directors.

Objective

The Board through its internal review has laid out and adopted the range of interest rates that shall be applicable to products based on the risk associated with the product.

Interest Rate Model

The model takes into consideration various elements and operational expenses along with a fair and equitable premium:

  • Weighted Average Cost of borrowing
  • Operational Expenses (infrastructure, technology, collection, human resources, etc.)
  • Provisioning for Losses / NPA

These costs are jointly referred to as Base Rate and a Risk Premium is added to arrive at the appropriate rate.

Loan Products

  1. Small Ticket Digital Personal Loans: INR 5000 – INR 1,00,000 for tenors 3-12 months
  2. Invoice Discounting for Vendors/Suppliers

Annual Percentage Rate (APR)

  • Small Ticket Digital Personal Loans: Benchmarked to Credit Card interest rates of leading Banks (SBI/ICICI/HDFC)
  • Invoice Discounting: APR of 14% – 24% depending on risk profile

Graded Risk Approach Factors

Interest rates are determined based on the following graded risk approach factors:

  • Profile and market reputation of borrower
  • Inherent nature of the product
  • End use for which the Loan is borrowed
  • Past repayment track history
  • Income proof / ability to repay
  • Regulatory stipulation