METAFIN CLEANTECH FINANCE PRIVATE LIMITED
INTEREST RATE POLICY
1. Introduction
Metafin Cleantech Finance Private Limited (hereinafter referred to as “Company”) has framed this Interest Rate Policy (hereafter referred to as “Policy”) in accordance with the regulatory requirements specified by the Reserve Bank of India (“RBI”).
2. Objectives of the Policy
This document aims to establish a framework for determining interest rates, processing charges and other charges. All charges and rates mentioned herein are exclusive of Goods and Service Tax (GST) or any other applicable tax and the company shall charge and collect such taxes wherever applicable over and above-mentioned charges and rates.
3. Methodology for determining an Interest Rate
The guiding principles for determining interest rate are as follows:
● The Board of the company shall adopt an interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances. The rate of interest and the approach for gradations of risk and rationale for charging different rate of interest to different categories of borrowers shall be disclosed to the borrower or customer in the application form and communicated explicitly to borrower.
● The rate of interest to be charged for loans and advances will be in the range of 18% to 25% p.a. on a reducing balance basis.
● The rate of interest shall be arrived at after taking into account relevant factors, such as cost of funds, margin and risk premium, including the following:
(a) Tenor of the Loan – The rate of interest charged will depend on the term of the loan;
(b) Internal and External Costs of Funds – The rate of interest charged will also be determined depending on the rate at which funds necessary to provide loan facilities to customers are sourced by the Company, normally referred to as internal cost of funds.
(c) Internal Cost Loading – The interest rate charged will also take into account costs of doing business. Factors such as the complexity of the transaction, the size of the transaction and other factors that affect the costs associated with a particular transaction will also be taken into account before arriving at the final rate of interest quoted to a customer.
(d) Credit Risk – As a matter of prudence, bad debt provision cost should also be factored into all transactions. This cost is then reflected in the final rate of interest quoted to a customer. The amount of bad debt provision applicable to a particular transaction will depend on the credit strength of the customer.
(e) Fixed rate versus Floating rate – The applicable rate of interest shall also be commensurate from the perspective of the fixed versus floating interest rate requirements of the customers.
(f) Periodicity of Interest – Interest will be charged for the period as stipulated in the loan agreement, subject to any modifications thereto as may be agreed by and between the Company and the customer.
● The rate of interest is an annualised rate so that the borrower is aware of the exact rates that would be charged to the account.
4. General Provisions
● Changes in Terms: The Company shall give notice to the borrower in English language with an option to choose a vernacular language as understood by the borrower of any change in the terms and conditions of the loan, including disbursement schedule, interest rates, service charges, prepayment charges etc. Further, any changes in the rate of interest shall be effected only prospectively and the loan agreement shall contain the necessary provisions in this regard.
● Grace Period: Interest will be payable by the customer / borrower on or before the due date stipulated therefor in the loan agreement entered into by the customer / borrower with the Company. However, the Credit Committee of Executives shall have discretionary power to grant a considered grace period to any customer / borrower.
● Moratorium: The Company may consider necessary moratorium for payment of interest and repayment of principal amount with proper built in pricing, on a case to case basis. ● Additional Interest and other Charges: Besides the normal interest, the Company levies additional interest for delays in payment of dues by the customer / borrower or additional interest on other facilities etc (annualised interest on the outstanding balance). The Company may charge other financial charges including processing fees, cheque bouncing charges, pre payment / foreclosure charges, RTGS or such other remittance charges, commitment fees, charges for services like issuance of “no due certificate”, security swap charges etc along with relevant taxes.
The Company shall not charge foreclosure charges / pre-payment penalties on all floating rate term loans sanctioned to individual borrowers.
● Communication of Interest Rate to the Customer: The Company shall convey the amount of loan sanctioned along with the terms and conditions including annualized rate of interest and method of application thereof and shall keep on record of the acceptance of these terms and conditions by the borrower. The loan agreement shall expressly stipulate the penal interest chargeable for late payment / repayment of dues by the borrower, in bold. The apportionment of the equated monthly instalments (“EMI”) amount towards the principal and interest will also be communicated by the Company to the customer / borrower by way of the repayment schedule.
● Waiver of Additional Interest / Financial Charges: Requests by the customer for waiver of
additional interest / financial charges would normally not be entertained by the Company and such waiver will be at sole and absolute discretion of the Credit Head or a person of equivalent position, exercised on a case to case basis or any other person that the Board deems fit.
● Annualised Rates: The rate of interest shall be annualised rates so that the borrower is aware of the exact rates that would be charged to the account.
● Pre-Payment: Pre-payment options available to the customer and the penalty / charges payable for exercise of such option shall be mutually agreed to on a case-to-case basis and communicated to the customer.
5. Regulatory Reference
This policy is framed as per the following regulatory references and in accordance with leading industry practice:
● Master Direction - Non-Banking Financial Company – Non-Systemically Important Non Deposit taking Company (Reserve Bank) Directions, 2016
6. Policy Review and Updates
The implementation of this policy shall be monitored and reviewed periodically by the Board of the Company.