Interest Rate Policy

Interest Rate Policy

The Reserve Bank of India (“RBI”) vide its Scale Based Regulation dated October 1, 2022, and subsequently amended from time to time, advises that the Non-Banking Financial Companies (NBFCs) and their Board of Directors undertake a comprehensive review of their internal principles and procedures and implement an interest rate model that factors in critical elements and relevant factors such as the cost of funds, margin, and risk premium in order to determine the rate of interest to be charged for loans and advances. This model aims to serve as the basis for determining the interest rates applicable to loans and advances, ensuring alignment with RBI guidelines and promoting financial stability and responsible lending practices in the NBFC sector.

Unicap Investments Private Limited (hereinafter referred to as “The Company” or “Unicap”) shall adopt all such guidelines prescribed from time to time and shall make appropriate modifications if necessary, to this policy to conform to the standards so prescribed. In compliance with these regulatory requirements and the Fair Practices Code adopted by the Company, the Company has adopted this Interest Rate Policy broadly outlining the Interest Rate Policy broadly outlining the Interest Rate model and the Company’s approach of risk gradation in this regard for its lending business.

• A. OBJECTIVE OF THE POLICY

  1. 1. Establish Benchmark Rates

     Determine Internal Benchmark rates for the borrower to finalise the rate of Interest to be charged from the borrower.

  2. 2. Accessibility and Transparency

     Publish the interest rates on the company's website to ensure accessibility and transparency.

• B. INTERNAL RESPONSIBILITIES

  Board of Directors: The Board of Directors of the Company shall oversee this Interest Rate Policy and ensure its effective implementation. Further, the Board may delegate the responsibility of implementation of this Policy and other functioning aspects to the Chief Compliance Officer/Executive Director /or Committee as it deems fit.

• C. INTEREST RATE

  The Company applies a per-day interest rate on its loan products. The applicable interest rate is determined after considering the following factors:

  • Tenure and Terms of the Loan: The per day interest rate shall depend on the duration for each loan is extended to a borrower as well as the different terms of repayment, if laid down in the Loan Agreement.
  • Internal and External Costs of Funds: The annualised rate of interest charged shall also depend upon the rate at which the funds are sourced to extend the loan facilities to customers, commonly known as the external cost of funds and shareholders of the company have also infused the capital in the company in huge proportions and accordingly the cost of such capital being infused shall be taken into consideration while determining interest rate commonly known as the internal cost of fund.
  • Credit Risk: The credit risk is related to loss of credit due to following factors such as the complexity of a loan transaction, size of the loan, geographical condition, customer segment, sourcing channels, stability in earnings and employment, financial position, past repayment track record and other factors that affect the costs associated with a particular loan account shall be taken into account before informing the final interest rate to a borrower.
  • Profit Margin: The fair profit margin is on the basis of the return expected by the shareholders and the risks involved. The profit margin shall be reasonable to attract fresh capital to sustain growth and be benchmarked with comparable companies. A reasonable level of gearing shall be maintained while arriving at the shareholder return.
  • Prevailing Market Practices: The Board of Directors may also recommend an per day rate of interest levied by other existing NBFCs for similar loan products or services, etc.

• D. INTEREST RATE MODEL

  The interest rate for credit facilities extended by the Company is driven by Internal Benchmark rate of the Company plus the risk premium associated with the borrower/facility.

  Risk Premium

  The Credit Risk Premium for the loan product offered by our Company is determined for the customers to account for potential credit loss risks. It is evaluated based on the following factors:

  • Credit and Default Risk: The likelihood of the borrower defaulting on the loan.
  • Historical Performance: Trends observed in similar homogeneous client groups.
  • Borrower Profile: Personal and financial characteristics of the borrower.
  • Repayment Track Record: The borrower's history of repaying loans.
  • Credit Bureau Score: Creditworthiness as reflected in their credit score.
  • Geographic Location: The borrower's location and its associated risks.
  • Location Delinquency Trends: Default trends in the borrower's area.
  • Customer Indebtedness: The borrower's existing debt obligations.

  The Rate of Interest that shall be charged to the customers for availing its loan product shall be mentioned in the Key Fact Statement and the Loan Agreement

• E. ADDITIONAL CHARGES

  • 1. Besides interest, the Company may levy additional financial charges such as loan processing fees, penal charges etc., wherever considered necessary.
  • 2. Any change in the charges will inform borrowers in advance and apply prospectively.
  • 3. The company can also levy penal charges as mentioned on the Key Fact Statement on the unpaid repayment amount, or specified amount as may be decided by the board of directors on delayed payment of instalments.

• F. INTEREST RATE COMMUNICATION

  Interest rates would be intimated to the customers at the time of sanction / availing of the loan. Repayment Amount will be made available to customer in the sanction letter as well as the Loan Agreement.

  The Company will mention penal charges charged for late repayment in bold in the loan agreement.

  The Interest rate shall not be discriminatory and shall be determined in a non-arbitrary manner for borrowers falling under similar risk categories, in compliance with applicable RBI regulations

• G. CHARGES RELATED LOAN APPLICATION PROCESSING, DOCUMENTATION, AND OTHER INCIDENTAL CHARGES

  All processing, documentation, and other charges levied are explicitly stated in the loan documents. They generally reflect the costs incurred in providing services to customers. Market practices, including those of competitors, are also considered when determining these charges.

• H. PENALTY CHARGES

  Penal charges are applicable in cases of making default by the borrower. The amount and rationale for penal charges shall be clearly communicated to customers through the loan agreement and sanction letter.

• I. APR DISCLOSURE AND COMPUTATION POLICY

  The Company shall compute and disclose the APR for all loan products in the KFS, representing the total annualised cost of credit including all applicable charges.The calculation methodology shall comply with RBI guidelines and be clearly communicated to the borrower before execution of the loan agreement.

• J. EQUITABLE LENDING AND NON-DISCRIMINATION POLICY

  The Company shall adopt a fair and non-discriminatory approach in determining interest rates based on objective criteria such as credit risk, cost of funds, and business considerations.No borrower shall be discriminated against on grounds such as gender, religion, caste, region, or any other prohibited basis, ensuring equitable treatment within similar risk categories.

• K.DIGITAL LENDING COMPLIANCE AND KFS STANDARDS

  The Company shall provide a KFS to borrowers before loan execution, including details of APR, total borrowing cost, repayment schedule, penal charges, and recovery mechanisms. A cooling-off/look-up period shall be offered, allowing borrowers to exit the loan by paying principal and proportionate charges without penalty, as per regulatory guidelines.

• L. CUSTOMER GRIEVANCE REDRESSAL FRAMEWORK

  The Company shall maintain an effective grievance redressal mechanism for complaints related to interest rates, charges, and lending practices, with defined escalation channels.If unresolved within the stipulated time, borrowers may approach the RBI Ombudsman, and all grievance details shall be available on the Company’s website and loan documents.