Interest Rate Policy

1. Introduction

The Reserve Bank of India vide its Master Direction DNBR. PD. 07/03.10.119/2016-17 dated September 1, 2016 and subsequent amendments) has directed that the Board of each NBFC shall lay down appropriate principles to determine the interest rates, processing and other charges. In compliance with the said RBI directions, Redux Credit Finance Private Limited (‘Redux’ or ‘Company’) has formulated the interest rate policy taking into account relevant factors such as cost of funds, margin and risk premium, etc.

2. Interest rate methodology and principles

In compliance with the RBI directions, the interest rate policy of the Company is as follows:

  • Redux has its own model of arriving at interest rates taking into consideration, inter alia the Company’s cost of funds, risk premium and other administrative costs.

  • The interest rate for different types of loans is computed based on loan tenor and risk calculations.

  • Other factors that will be taken into account to arrive at the final lending rate will be interest, loan risk, default risk, liquidity risk and market risk in the related business segment, historical performance of similar clients, profile of the borrower, tenure of relationship with the borrower, repayment track record of the borrower in case of existing customer, etc. Such information is gathered based on information provided by the borrower, the Company’s records, etc.

  • The rate of interest for the same product and tenor availed during same period by different customers could vary depending upon any of / combination of the above factors, borrower’s individual loan profile.

  • The interest rates could be offered on fixed or variable basis, of varying terms and repayment timeline, depending upon the default risk of the borrowers.

  • For the above interest, the range could vary between eighteen and thirty-six per cent annually.

  • The interest could be charged on monthly, quarterly or half-yearly rests for different products.

  • The interest rate will be communicated to the customers prior to submission of the loan application and EMI apportionment towards interest and principal dues will also be made available to the customer.

  • Interest payments will be included in the overall payment schedule and the interest will be deemed payable immediately on the due date as communicated and no grace period for payment of interest will be allowed.

  • In addition to the interest charged on the loan, the company may levy additional / penal interest for delay or default in making payment of any dues. These additional or penal charges will be communicated to the customer prior to submission of loan application.

  • The Company will also levy other charges such as processing fees, origination fees, late payment charges, re-scheduling charges, pre-payment / foreclosure charges, part disbursement charges, etc., wherever considered necessary.

  • Claims for refund or waiver of charges / penal interest / additional interest will normally not be entertained by the Company and it is at the sole discretion of the company to deal with such requests.

  • Any changes to the interest rate will be reviewed by the Asset Liability Committee (ALCO) and will be periodically published on the Company website and communicated to the borrowers as deemed fit by the Company.

  • Such revisions in the interest rates and other charges will be prospective in effect

3. Key responsibilities of the Company

  • In addition to the amount of loan sanctioned, the Company shall convey to the borrower, in the vernacular language as understood by the borrower, the annualised rate of interest. This shall be communicated in a manner deemed fit by the Company and shall be kept on record.
  • Loan agreements shall capture key conditions such as notice of change in the interest rate of the borrower in a language as understood by the customer, prospective effect of change, etc.
  • The sanctioning authority shall, record specific reasons in writing at the time of sanctioning the loan, if no interest is stipulated or a moratorium is granted for any period.
  • In accordance with the RBI Directions, the Asset Liability Committee (ALCO) of the NBFC shall determine the interest rates
  • The Company shall publish the interest rate and the policy on interest rate on its web site.

4. Review of the policy

The policy will be reviewed by the ALCO annually and changes, if any will be approved by the Board of Directors.