Interest Rate Policy

INTRODUCTION

Navkar Nivesh Private Limited (“the Company – NNPL”) is a Non-Banking Financial Company (NBFC) committed to providing customized financial solutions. This Interest Rate Policy outlines the principles and procedures for determining interest rates for the loans offered to varied customer segments in alignment with the Company’s mission, associated risks, customer-centric approach and Regulatory framework.

The policy adheres to the Reserve Bank of India (RBI) guidelines, including:

• Master Direction on Non-Banking Financial Companies (NBFCs) issued on September 1, 2016, and updated guidelines from time to time.
• RBI circular DNBS.204 / CGM (ASR)-2009 and subsequent amendments mandating fair practices and transparent pricing models for NBFCs.
• RBI’s provisions on interest rate reset, penal charges, and customer communication.

OBJECTIVE

• To establish a fair, transparent and risk-oriented framework for determining interest rates.
• To ensure compliance with regulatory requirements while achieving sustainable business growth.
• To align with the market dynamics and competitive scenarios.

Rate of Interest

The Company may offer fixed and floating rate loans to its customers based on the type of loan product. The rate of interest offered to the customer may vary for various customers based on the loan product offered and associated risks involved.

Fixed Rate Loans

For fixed rate loans Navkar’s Benchmark Lending Rate (NBLR) may be used for reference, but the loans shall not be linked to subsequent NBLR changes in the future. The Fixed rate is decided based on various parameters including but not limited to Cost of Funds, operational expenditure, business related risks, etc. The ROI offered to the customer at the time of origination of loan shall remain fixed for the full tenure of the loan or for the tenure specified in the sanction and loan documentation.

Floating rate loans

The floating rate of loans shall be linked to the NBLR. The effective ROI applicable to the customer shall constitute:

• Navkar Benchmark Lending Rate (also referred to as NBLR) and
• Spread: The spread on a specific loan shall be derived considering multiple factors, which may include, borrowers’ profile, credit and repayment history, loan ticket size, repayment option chosen, collateral security, loan tenure, associated risks and competitive market landscape to ensure a balanced risk-based pricing. The rate of interest for the same product and tenor availed during the same period may vary for different customers depending upon consideration of all or combination of the above factors. The company may review the spreads being charged to customers at appropriate intervals and may change the spreads being charged considering the performance and conduct of the account.

Computation of Navkar Benchmarking Rate (NBLR)

The Company shall use external and internal micro and macro parameters, competitive scenario, market dynamics and operating costs of the company to determine the benchmark rate. The benchmark rate shall be called Navkar Benchmark Lending Rate “NBLR” and shall be used for pricing of all loans advanced by the company. The floating rate loans shall be linked to “NBLR”.

The following factors should be used to determine the NBLR:

• Cost of Borrowings: Cost of borrowing shall include the rate of interest on borrowings; processing fees and associated costs related to the loan. Cost of all borrowings, including term loans, debentures, and other sources to be considered to determine NBLR
• Cost of Equity: The expected return on equity shall be determined based on prevailing industry outlook and the company’s business and growth prospects.
• Market volatility and Market dynamics: Market dynamics like repo rate, interest rate scenarios, MCLRs of various banks, liquidity in market, regulatory framework to be considered to determine NBLR.
• Operating Costs: Operating costs of the company along with credit costs to be considered as one of the factors for determining NBLR.
• Regulatory Requirements: The cost of regulatory capital required to be maintained shall be considered for determining NBLR.
• Risk premium: The risk premium (considering market dynamics) as envisaged with the product to be considered for the calculation of the NBLR.

The NBLR shall be reviewed by the ALCO committee periodically. Any increase or decrease in NBLR may be decided based on the above factors.  The ALCO committee shall be empowered to fix a different NBLR than as calculated above considering market dynamics and decide on the applicability of these changes to various classes of borrowers.

Other Charges

Besides interest, other financial charges such as one time processing fee, cheque/NACH bouncing charges, cheque/NACH swap charges, interest rate reset charges etc. as applicable would be charged by the Company wherever considered necessary as detailed in the ‘ Service Charges & Fees ‘ on the NNPL’s website. Any revision in charges would be updated on NNPL’s website and would be levied prospectively to the customers as applicable.

Penal Charges

• Penal charges shall be applicable for non-compliance with loan terms.
• Penal charges will be clearly communicated to borrowers and will not be included in the capitalized loan amount, ensuring transparency and compliance with fair practices. No interest shall be charged on Penal fees/charges.

Interest Rate Reset and Switching Options

Rate Reset Provisions:

The NBLR re-set procedures and period for floating rate loans would be decided by Asset Liability Management Committee (ALCO) in line with the extant RBI guidelines.

Navkar Nivesh Private Limited website, ensuring greater flexibility.

Policy Review

This policy will undergo an annual review or updates as necessitated, with revisions approved by the Board of Directors based on recommendations from the Asset Liability Management Committee (ALCO).

Annexure – I

Note: Above are the indicative ranges of rates of interest offered for specific loan products. However, the final risk pricing shall be determined by the relevant loan sanctioning authority.