1. Purpose & Regulatory Basis

This Policy is framed pursuant to the Reserve Bank of India's circular on Fair Lending Practice - Penal Charges in Loan Accounts (dated August 18, 2023), and is to be read together with the Company's Fair Practices Code and Interest Rate Policy. It sets out the charges applicable to a Borrower's Personal Loan (“PL”) account on delay or default in repayment, and the principles governing their levy.

2. Charges during the currency of the Loan (Pre-Default)

• Rate of Interest: 60% to 67% per anum, reducing balance, as set out in the Interest Rate Policy.

• Service Fee: accruing at 60% per annum of sanctioned amount/original principal + GST; added to each month's instalment

These are contractual charges for the use of funds, are not penal in nature, and are disclosed in the Key Fact Statement and Sanction Letter.

3. Charges on Default: Replacement, not Addition

On default (non-payment of any instalment by its due date), the Rate of Interest and Service Fee above cease to accrue and are replaced, not added to, by:

• Post Default Interest: 60% to 67% per anum, on the overdue principal, from the date of default until the date of actual payment, calculated on a simple, non-compounding basis; and

• Repayment Bounce Penal Charge: accruing at 60% per annum on principle overdue, charged daily on overdue principle amounts from date of default.

No Borrower shall be charged the Rate of Interest and Service Fee together with Post Default Interest and the Repayment Bounce Penal Charge for the same overdue period.

4. Late Payment Fine

A Late Payment Fine of 36% per anum is levied from the date of default until the date of actual payment.

• Non-compounding: no interest is charged on the Late Payment Fine, and it is not added to principal for the purpose of computing Post Default Interest.

• 3-Day Waiver: where the overdue amount is paid within 3 (three) days of the due date, the Late Payment Fine may be waived at the discretion of the Collections function/Credit Committee, having regard to the Borrower’s repayment history.

5. Principles Governing Levy of Charges

• Reasonable and commensurate with the default; not used as a revenue enhancement tool.

• Non-discriminatory within the same product category.

• Charges for individual (non-business) Borrowers shall not exceed those applicable to non-individual Borrowers for a similar default under the same product.

• No capitalisation or compounding of any penal charge.

• Levied only for delay/default in repayment, never for unrelated procedural non-compliance.

  
  

6. Disclosure

The quantum of, and reason for, all charges under this Policy are disclosed in the Key Fact Statement, Sanction Letter and Loan Agreement, and are communicated to the Borrower with each reminder or notice of default (SMS/email/in-App) and reflected in the statement of account.

7. Governance & Review

This Policy is approved by the Board of Directors, it shall be reviewed at least annually, or earlier upon a change in applicable regulation; interim rate or charge changes may be recommended by the Credit Committee for ratification by the Board. Annexure I below shall be updated whenever a rate or charge changes, with corresponding updates to the Key Fact Statement template and website disclosure.