Interest Rate 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
- Small Ticket Digital Personal Loans: INR 5000 – INR 1,00,000 for tenors 3-12 months
- 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
Added in this revision. The sections below bring this policy in line with current RBI expectations. Values shown in brackets are awaiting confirmation from the compliance office and must be filled in before go-live.
Fees and charges
All charges are disclosed in the Key Facts Statement provided to every borrower before the loan agreement is signed, and are expressed in the Annual Percentage Rate.
| Charge | Amount |
|---|---|
| Interest rate (reducing balance) | 18% – 30% per annum |
| Processing fee | 2% – 3.5% |
| Penal charges | The contract rate plus 12% per annum on the overdue amount |
| Mandate / instalment failure charge | ₹25 – ₹500 plus GST, by loan type |
| Foreclosure or prepayment charge | Nil |
| Stamp duty and statutory charges | At actuals, as applicable in the state |
Penal charges
Any charge levied for non-compliance with the terms of the loan, its quantum and the reason for it are set out in bold in the loan agreement and in the Key Facts Statement issued before you sign, and are communicated to you each time such a charge is levied. The charge is not capitalised — no further interest is computed on the charge itself.