1. Background

    Si Creva Capital Services Private Limited is a private limited company, incorporated under the provisions of the Companies Act, 2013, having Corporate Identification Number (CIN) U65923MH2015PTC266425 (“Si Creva”/“Company”). Si Creva is a Middle Layer Non-Deposit taking Non-Banking Financial Company, bearing Registration no. N- 13.02129, registered and regulated by the RBI Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023, as amended from time to time and such other rules, regulations, directions, circulars, notifications, and orders issued in this regard from time to time (“RBI Directions”).

    Si Creva is in the business of the provision of consumer and personal loans. As per RBI guidelines as applicable from time to time, board of NBFC after recommendation from ALCO shall approve an interest rate model for the Company, taking into account relevant factors such as Weighted Average Cost of Funds (W-CoF), Opex Cost, Risk Premium and Margin to determine the Rate of Interest (RoI) to be charged for loans and advances. This policy intends to provide a broad framework for interest rate model of the Company.

  2. Objective

    The objective of the policy is to establish principles for loan pricing, determining the ultimate interest rate applicable on loans provided to customers.

  3. Review of Policy

    Board shall review the policy at least once every financial year or earlier as may be required for changes in the risk gradation framework or interest rate pricing structure of the loans.

  4. Governance Structure

    The Board of Directors shall have oversight for the Interest rate policy of the Company. The board may as deem fit, delegate operational aspects to ALCO or other committee.

    ALCO or higher committee shall be responsible for taking decisions to change the benchmark rate. ALCO meeting will be held quarterly and when any changes in the benchmark rate would be decided by ALCO or higher committee and would be put up to board in subsequent meeting.

  5. Interest Rate Model

    The Interest Rate Model determines the pricing (rate of interest and other charges) levied to the borrower and are based on the following broad parameters:

    1. Risk profile of the borrower
    2. Tenor of the Loan
    3. Weighted Average Cost of Funds (W-CoF) – Internal as well as external
    4. Risk premium/credit risk in the related business segment
    5. Historical performance of similar kinds of customers
    6. Prevailing Interest rate trends in the money market
    7. Treasury bill rates and the sovereign yield curve
    8. Spreads between the sovereign and the AAA corporate bonds
    9. Prevailing Base Rate of major commercial banks
    10. Market scenario relating to credit risk premia/default premia including CDS spreads
    11. Internal cost of doing business
    12. Interest rate offered by other NBFCS’ in the industry
    13. Other factors that may be relevant in each case.

    Pricing* (rate of interest and other charges) for our different products are as follows

    Transaction Credit Personal Loans – Short Term Personal Loans – Long Term
    Tenure 30 days 30 to 62 days 6 to 36 months
    Processing / Transaction fee1,2 0% to 8% 0% to 8% 0% to 6%
    Interest rate 14% to 36% 14% to 36% 14% to 36%
    1. Percentage of loan amount in case of processing fee for Personal Loans (exclusive of GST)
    2. Percentage of the drawdown amount in case of Transaction fee for Transaction Credit product (exclusive of GST)
    3. APR is the annualized cost of borrowing for a borrower, encompassing both the interest rate (ROI) and additional fees like processing fees or transaction fees.
    4. Our internal proprietary model classifies customers into bands 1 to 20 based on their risk profile. The pricing to the customer is determined on the basis of band assigned to the specific customer and pricing for the same loan product and same tenor availed during the same period by different customers cannot be standardized as it can vary for different customers based on risk gradation.
    5. All costs associated with the products such as weighted average cost of funds, opex cost, risk premium and margin are factored in for determining the pricing for the loan.
    6. Total pricing charged to all customers, irrespective of risk grading is below APR capping approved by the Board of Directors
    • *Determination of Pricing:

      The benchmark rate or the product pricing (Rate of Interest & Other charges) is determined based on below factors:

      1. Weighted Average Cost of Funds (W-CoF): The Company borrows funds through term loans. Weighted average cost of borrowing such funds is taken for benchmark calculation. The W-CoF ranges from 13% to 16% per annum.
      2. Opex Cost: This includes various costs such as those for getting new customers (CAC), checking their eligibility through credit bureaus, conducting Know Your Customer (KYC) procedures, maintaining the technology platform, offering good customer service, handling payment gateway expenses for disbursements and collections, managing tele-calling, covering field-related expenses for collecting overdue loans, and employee costs. Total Opex cost ranges from 3 to 5% of disbursement amount.
      3. Risk premium: This covers the credit and default risk on the portfolio.
      4. Margin: This covers reasonable margin to operate a sustainable lending business.

      Benchmark rate = W-CoF + CoE + Opex Cost + Risk Premium + Margin

    • Rate of Interest:

      1. The interest rate could range between fourteen to thirty-six percent depending upon the risk profile of the customer and other factors. The interest reset period for variable-rate loans would be decided by the NBFC from time to time.
      2. The interest rates offered can be on a fixed or variable basis and can be charged on a flat or reducing balance method.
      3. The interest could be charged on monthly or quarterly rests for different products/segments.
      4. • The rate of interest for the same loan product and same tenor availed during the same period by different customers cannot be standardized as it can vary for different customers based on risk gradation.
    • Processing / Transaction Fee

      1. Besides interest, processing / transaction fee may be levied by the NBFC for the provision of services related to the loan granted to the customers.
      2. Similar to interest rate, processing / transaction fee for the same loan product and same tenor availed during the same period by different customers can not be standardized as it can vary for different customers based on risk gradation.
    • Other charges

      1. Besides interest and processing / transaction fee, charges like cheque bouncing charges, late payment charges, re-scheduling charges, pre-payment / foreclosure charges, part disbursement charges, cheque swap charges, security swap charges, charges for issue of statement account, customer care, the credit assessment, cash handling, ECS/ Direct Debit/ ACH mandate registration/lodgement/handling or for any other service provided by the NBFC or cost incurred by the NBFC for the provision of services related to the loan granted to the customers. In addition to these charges, stamp duty, service tax, and other cess would be collected at applicable rates from time to time.
      2. Any revision in these charges would be prospective in effect.
      3. These fees and charges may vary based on asset/commodity financed, exposure limit, expenses incurred at the point of sale, and customer segment and generally represent the costs incurred in rendering the services to the customer.
      4. • The NBFC may levy additional/penal charges for delay or default in making payments of any dues. These additional /penal charges for different products or facilities would be recommended by ALCO or higher committee and approved by the Board.
    • Operational Aspects

      1. Interest rates, processing / transaction fee and other charges would be intimated to the customers at the time of sanction/availing of the loan and EMI apportionment towards interest and principal dues would be made available to the customer.
      2. The interest and other charges shall be deemed payable immediately on the due date as communicated and no grace period is allowed.
      3. The changes in the interest rates and related charges would be prospective in effect and intimation of change of interest or other related charges would be given to customers by way of email, SMS and in-app notification.
      4. All such fees and charges shall be clearly communicated to the customer either by way of printing on the sanction letter or by publishing on the website of the NBFC.
      5. While deciding the charges, the practices followed by the competitors in the market would also be taken into consideration.
      6. The Company will communicate annualized cost (APR) on account of fees and interest to all its customers so that its customers are aware of exact rates that will be charged to respective loan.
      7. The Company will ensure that applicable rate of interest to any customer should not exceed the maximum rate fixed for each product offered by the Company.
      8. The Company will mention penal charges for late repayment in the loan. Any penal charges being levied on the customers will be based on the outstanding amount of the loan and the rate of such penal charges will be disclosed directly on an annualized basis to the customer, thereby standardizing the rate of such penal charges being levied. Any charges that are not communicated will not be chargeable to customers at any stage during the loan term.
      9. The NBFC may also levy and collect charges and penalties for prepayment/ foreclosure of loan by the customer, for delay or late payment of loan installments and other dues to the NBFC and bouncing of ECS/ Direct Debit/ ACH.
      10. • These charges for different products or facilities would be recommended by the ALCO or higher committee and approved by the Board and the change will be notified on the Company’s website.
      11. In lieu of the RBI circular on Fair Lending Practice – Penal Charges in Loan Accounts RBI/2023-24/53 DoR.MCS.REC.28/01.01.001/2023-24 dated August 18, 2023, the Company shall also ensure compliance of the following terms. The details of certain terms are as under:
      12. Penalty, if charged, for non-compliance of material terms and conditions of loan contract by the borrower shall be treated as ‘penal charges’ and shall not be levied in the form of ‘penal interest’ that is added to the rate of interest charged on the advances. There shall be no capitalisation of penal charges i.e., no further interest computed on such charges.
      13. The quantum and reason for penal charges shall be clearly disclosed to the customers in the loan agreement and most important terms & conditions / Key Fact Statement (KFS) as applicable, in addition to being displayed on website under Interest rates and Service Charges.
      14. Whenever reminders for non-compliance of material terms and conditions of loan are sent to borrowers, the applicable penal charges shall be communicated. Further, any instance of levy of penal charges and the reason therefor shall also be communicated.
    • Additional Covenants

      1. The NBFC may, at its sole discretion, allow the prepayment/foreclosure of the Loan Amount subject to certain conditions and on payment of prepayment/foreclosure penalties by the Borrower.
      2. The minimum number of installments post which pre-payment/ foreclosure is allowed may vary based on the products & tenure of the loan and shall be specified in the sanction letter.
      3. Claims for refund or waiver of charges / penal charges / additional interest would normally not be entertained by the NBFC, and it is at the sole discretion of the NBFC to deal with such requests.
      4. • Any revision in the NBFC’s interest rates applicable to business would be reviewed by the ALCO or higher committee and recommended to the Board.

      It is abundantly clarified that in case the Company grants loan to any borrower with an annual family income of upto Rs. 3.00 lakh, the Company will ensure to comply with RBI Circular RBI/DOR/2021-22/89 dated March 14, 2022, as may be updated from time to time.

  6. Risk Gradation

    Based on underwriting parameters we have implemented risk gradation for evaluating borrower’s creditworthiness and assigning suitable offers. Risk grading enables the Company to differentiate customers across different risk spectrum and helps in applying risk premium to that customer. The risk premium attached with a customer shall be assessed inter-alia based on the following factors:

    • profile of the customer;
    • inherent nature of the product, type / nature of facility, refinance avenues, whether loan is eligible for bank financing, etc;
    • overall customer yield, future potential, repayment capacity based on cash flows and other financial commitments of the customer, mode of payment;
    • Risk premium/credit risk in the related business segment;
    • Credit score of an individual which determines the credit payment history across loan types and credit institutions over a period of time;
    • regulatory stipulations, if applicable; and
    • any other factors that may be relevant in a particular case.

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