Interest Rate to Borrower

The final interest rate charged to the borrower (annualised rate) includes all of the components described above:

Interest Rate to Borrower = WACF + Annualised Cost of Cash Reserves + Annualised Operating Cost net of Processing Fee + Annualised Net Credit Risk Premium

The interest rate is further calibrated within the Company’s risk-based pricing framework (see Section H below), such that borrowers assessed as lower risk are ordinarily offered a rate towards the lower end of the applicable range, and borrowers assessed as higher risk (but still within the Company’s risk appetite) a rate towards the higher end. The interest rate so determined for the PL product is listed for quick reference in Annexure–1.

D. Processing Fees

The cost of sourcing and handling a loan application is recovered from the customer as a processing fee. Several processes are undertaken to assess and verify every customer prior to approval, and the costs incurred in implementing these processes are recovered from customers whose loans are approved, in the form of a processing fee. The processing fee may vary based on the loan amount, customer segment, tenor and the risk associated with the application, and generally represents the cost incurred by the Company in rendering the PL facility to the customer.

The Processing Fee is currently charged at up to 15% of the sanctioned amount, excluding GST. Management regularly reviews the processing fee and may revise it at any time; any revision shall be applied prospectively, with due communication to customers. All processing, documentation and other charges recovered are expressly stated in the loan documents. All applicable taxes shall be charged in accordance with guidelines issued by the Government from time to time.

E. Service Fee

In addition to the Processing Fee, the Company shall levy a Fee for services rendered in connection with serving the PL facility (including platform access, platform maintenance, cloud cost, account monitoring and repayment-facilitation services). The Service Fee currently accrues at 60% per annum on the sanctioned amount, computed on a pro-rata basis for the actual tenure of the loan, and is levied and collected solely by the Company. For the Company's standard 2-month PL tenure, this results in an effective Service Fee of approximately 10% of the sanctioned amount paid across 2 instalments, before GST.

Consistent with the RBI Digital Lending Directions which prohibit a Lending Service Provider (“LSP”) from directly charging any fee to the borrower, both the Processing Fee and the Service Fee are levied and collected only by the Company, and are fully reflected in the Key Fact Statement (“KFS”)/Annual Percentage Rate (“APR”) disclosed to the borrower. Any amount payable by the Company to its LSP for origination and technology-facilitation services under the Board-approved LSP agreement is borne by the Company out of the aforesaid fees/interest income, and is not charged separately to the borrower.

F. Penal Charges

For any delay in payment beyond the due date specified in the repayment schedule, the following charges apply to the overdue amount, from the date of default to the date of actual payment:

• Post Default Interest: the contracted Rate of Interest continues to accrue on the overdue principal amount.

• Repayment Bounce Penal Charge: Post default, the Service Fee ceases to accrue with effect from the date of default; the same 60% p.a. accrual on the overdue principal continues without interruption, but is thereafter characterised as the Repayment Bounce Penal Charge rather than the Service Fee. This is accordingly a continuation, not an addition, of the pre-default Service Fee.

• Late Payment Fine: an additional 36% p.a. on the overdue instalment amount, subject to a discretionary three-day waiver at the Company's determination.

None of the above charges are capitalised or compounded; no further interest is computed on the charges themselves, though this does not affect their accrual over the period the amount remains due. The quantum and applicability of each charge is disclosed to customers in the loan agreement and the sanction letter/KFS.

G. Other Charges

Other charges constitute bounce charges, prepayment/foreclosure charges and the like, and are charged to the customer with due intimation through the KFS. Any charge not forming part of the KFS shall only be levied after obtaining the customer’s prior consent.

• Prepayment/Foreclosure Charge – No additional prepayment/foreclosure charges apply.

• NACH/UPI Autopay mandate-bounce or swap charges – ₹500 per instance.

• Payment Gateway charges on actuals

• Legal and collection charges actually incurred, where applicable.

H. Gradation of Loan Based on Risk Assessment

The Company grants credit facilities to individual borrowers who demonstrate both the intention and the ability to discharge their obligations. The PL product is granted on an unsecured basis, in accordance with the Company’s Credit Policy. Every applicant’s risk grading is assessed through checks conducted during the KYC and onboarding process, resulting in a Low/Medium/High risk categorization. In assessing credit transactions, the Company focuses on the following principles:

• a detailed profile of the borrower at the time of onboarding, with due diligence in accordance with the Company’s KYC/AML Policy;

• for repeat customers, the tenure of the relationship, past repayment track record, and the historical performance of similar customer segments;

• repayment capacity, sources of income, and other financial commitments of the borrower;

• the default risk associated with the borrower’s income/employment segment;

• additional data-based signals, including credit bureau information and, where applicable and with consent, transactional SMS data, bank statement/Account Aggregator data and other alternate data sources;

• rates may also vary having regard to prevailing rates offered by other lenders in comparable segments; and

• any other factor considered relevant in a particular case, or as the Company may deem fit.

J. Disclosure to Borrower

The Company shall inform each borrower, in writing, in English and in a vernacular language as understood by the borrower, and as otherwise required under applicable law, of all relevant details in relation to the PL facility, including all necessary documentation to be executed in connection with the loan (i.e., loan agreement, sanction letter/KFS, along with all relevant enclosures). This Policy shall be made available on the Company’s website.

K. Review of Policy

This Interest Rate Policy is subject to annual review, based on the recommendation of the Company’s Credit Committee reporting to the Board. The Policy may be reviewed earlier were necessitated by a change in regulatory guidelines or in the Company’s business practices. Notwithstanding anything contained in this Policy, in the event of any contradiction between the provisions of this Policy and any existing legislation, rules, regulations or law (or any modification or enactment thereof), the provisions of such law, legislation, rule or regulation shall prevail over this Policy.