Policy on Determination of Interest Rate
Satya Capital Services Private Limited
Background
In line with the Reserve Bank of India’s Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 (as amended), Satya Capital Services Private Limited (“the Company”) has established this policy to ensure transparent and fair determination of interest rates and charges. The Company’s Board is responsible for formulating and reviewing this policy, which is also made available on the Company’s website as per regulatory requirements.
1. Interest Rate Determination
Interest rates charged to borrowers are determined after considering a range of factors, including:
- Loan Tenure
- Internal and External Cost of Funds
- Prevailing Treasury Bill Rates and Sovereign Yield Curve
- Spreads between Sovereign and AAA Corporate Bonds
- Benchmark Lending Rates of Major Banks
- Borrower’s Risk Profile
- Market Credit Risk and Default Premiums (including CDS spreads)
- Internal Operating Costs
- Rates Offered by Peer NBFCs
- Other Case-Specific Factors
This approach ensures that the interest rate is both risk-based and competitive, in line with industry norms and regulatory expectations.
2. Risk Assessment
The Company evaluates the risk profile of each borrower based on:
- Management Risk
- Business Risk
- Financial Risk
- Industry Risk
- Collateral Risk
Further, the following are also considered:
- Industry Type
- Profitability Track Record (last three years)
- Projected Profitability during the loan tenure
- Security Coverage
- Reputation of Borrower/Promoter/Principal Shareholder
- Past Defaults and Their Resolution
- Promoter/Shareholder Background
- Other Relevant Factors
As a result, interest rates for the same product and tenure may differ among customers, depending on these risk and business parameters.
3. Board Oversight
The Board of Directors reviews and approves the interest rates after a thorough assessment of the above factors. The policy is reviewed annually or as required by regulatory changes.
4. Floating Rate Loans (EMI-Based)
For floating rate personal loans:
- At the time of sanction, borrowers are informed of the potential impact of benchmark rate changes on EMIs and/or loan tenure. Any subsequent changes are promptly communicated.
- Borrowers are given the option to switch to a fixed rate as per the Board-approved policy, with the number of allowed switches specified in the sanction letter.
- Borrowers may choose to increase EMIs, extend tenure, or both, and may prepay at any time, subject to applicable guidelines on foreclosure/prepayment charges.
- All charges related to switching from floating to fixed rates, and other administrative fees, are transparently disclosed in the sanction letter and updated as needed.
- The Company ensures that any extension of loan tenure does not result in negative amortization.
- Borrowers receive quarterly statements detailing principal and interest paid, remaining EMIs, and the annualized interest rate/APR, presented in a clear and simple format.
5. Additional Charges
In addition to the base interest, the Company may levy:
- Penal Charges (see below)
- Processing Fees
- Foreclosure/Prepayment Charges
- Commitment Fees, etc.
All such charges are clearly mentioned in the loan agreement and related documents.
6. Customer Communication
The Company ensures that all borrowers are informed of this policy prior to loan disbursement, and that all terms are clearly communicated as required by the Fair Practices Code and RBI guidelines.
7. Review
This policy is reviewed at least annually, or more frequently as required by changes in laws, regulations, or business needs.
Quantum and Reason of Penal Charges
- Penal Charges: 2% per month on the overdue amount (plus applicable taxes) for defaults in loan installment repayment.
- For Non-Compliance: 2% per month on the outstanding loan facility amount (plus applicable taxes) for breaches of agreed terms and conditions as detailed in the Sanction Letter.