Interest Rate & Penal Charges Policy
Fair Practices Framework, Risk Gradation Architecture, and Institutional Lending Operational Guidelines.
1. Introduction
RB Credits Pvt Ltd ("the Company") is a Private Limited Company registered with the Reserve Bank of India (RBI) as a Non-Banking Financial Company (NBFC) – Base Layer (BL) as per Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 dated 19th October 2023, and as amended till date.
The Company is engaged in providing loan against property, home loan, and vehicle loan facilities to eligible borrowers. The Company is committed to ensuring responsible lending, fairness, transparency, and integrity in all its dealings with customers.
The Company adheres to the principles of the Fair Practices Code prescribed by the Reserve Bank of India for NBFCs and ensures that lending and recovery practices are conducted in a fair, ethical, and transparent manner.
2. Regulatory Requirement
The Reserve Bank of India (“RBI”) has issued the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 dated October 19, 2023 (as amended from time to time) [‘the Master Direction’]. In furtherance, RBI vide circular on Fair Lending Practice – Penal Charges in Loan Accounts dated August 18, 2023 has released guidelines to ensure reasonableness and transparency in disclosure of penalties to the customers.
The RBI vide the Master Direction has advised NBFC's to adopt an appropriate interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and to determine the rate of interest to be charged for loans and advances and other similar financial products and to disclose the rate of interest, gradations of risk and rationale for charging different rate of interest to different categories of borrowers or customers or clients and to disclose the rate of interest to the borrowers or customers or clients in the **Loan Application Form (the LAF)** and to be communicated explicitly in the sanction letter / intimation.
3. Interest Rate Model
R.B CREDITS Private Limited focuses on providing a wide range of loan facilities to its customers i.e. MSME, Loan against property, all kind of commercial vehicles, Tractors, Two-wheelers, Personal Loan and Business Loan etc. The interest rate applicable to each loan account is assessed on a case specific basis based on evaluation of various structural factors:
Tenor & Payment Terms
The term of the loan; terms of payment of interest (viz. monthly); terms of repayment of principal; bullet payment frameworks, etc.
Internal & External Costs
The rate at which external funds are sourced. Internal cost of funds, being the expected return on equity, acts as an additional defining indicator.
Credit Risk Assessments
Bad debt provisions applicable depend heavily on the credit parameters of the customer, directly mirroring onto the final rate quoted.
Market Dynamics Views
Management's evaluations on peer NBFC trends alongside rigorous forecasts and analysis of systematic 'what-if' market scenarios.
4. Approach for Gradation Risk
The risk premium attached to a customer shall be systematically assessed inter-alia based on the following multi-layered parameters:
Risk Calibration Notice
Risk premium indicators ensure precise credit evaluations. These variables dynamically evaluate risk profiles to provide fair, customized, and sustainable loan offerings across both individual and business portfolios.
5. Rate of Interest Structure
The management understands that considering the higher cost of borrowing and the risk profile of the customer, it has to maintain adequate margins to cover operational and delinquency risks.
The final loan amount, annualized rate of interest, and tenure of the loan will be systematically communicated to the borrower in the formal Welcome Letter along with breakdown metrics towards interest and principal dues.
Besides normal interest, the Company may levy additional interest for ad-hoc facilities, penal charges, or default charges for payment delays. Late payment details will be printed in bold letters within the main loan agreement documentation.
Processing charges, cheque bounces, prepayment timelines, swap fees, collection field follow-ups, statement issuances, legal fees, and applicable taxes (GST, Cess, etc.) will be calculated and collected based on statutory rates whenever deemed necessary.
6. Penalties Levied on the Customer
Zero Capitalisation Protocol
The Company does not charge penal interest on delayed payments. Penalties are applied solely on overdue fractions and never capitalized—meaning no compounding interest is ever computed on top of assessed penal charges.
Individual vs Non-Individual Caps
Penal structures assigned to individual borrowers for non-business loans are strictly regulated so they do not exceed penal limits applied to institutional corporate borrowers for identical material non-compliance breaches.
Floating Rate Protections
Per extant regulatory frameworks, no foreclosure rates or early prepayment penalties will ever be placed on floating rate interest lines sanctioned directly to individual retail borrowers.
KFS & Portal Disclosures
Quantum details and procedural rules for fees are explicitly written in customer Key Fact Statements (KFS) and transparently listed across corporate portals under the "Interest Rates and Service Charges" directories.
*All fresh loans availed or renewed switch seamlessly onto these operational terms from April 01, 2024. Legacy loan accounts automatically update during reviews or within six months of implementation.
7. Board Review & Jurisdictional Priority
The Board of Directors shall comprehensively review and amend this policy platform framework as and when operational circumstances or central banking provisions require adjustments.
If any point of conflict regarding analytical interpretation or structural definitions emerges between this policy and corporate publications, the authoritative statutory mandates issued by the central banking regulator shall systematically override internal frameworks.
