PREAMBLE

This Interest Rate Policy is formulated in accordance with the RBI Guidelines on Fair Practices Code for NBFCs (under the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023), updated from time to time. Progfin Private Limited (Formerly known as Hytone Holdings Private Limited/the Company) has documented this Interest Rate Policy / Model, approved by the Board of Directors, which lays down internal principles and procedures in determining interest rates and other charges on the loan products offered by the Company. This Policy has outlined the interest rate model and the approach of risk gradation in its lending business.

TRANSPARENCY

The interest rate determination process and interest rate shall be disclosed on the Company’s website and shared with the customer in a transparent manner.

INTEREST RATE MODEL

Interest rate applicable to each loan account, within the applicable range is assessed on a case-specific basis, based on evaluation of various factors detailed below:
(a) Cost of Equity: The Company needs some equity share capital and reserves in line with applicable RBI regulations and the expected return of equity is taken into consideration for the purpose of this model;
(b) Fund Raising Cost: Depending on the loan product offered to the Company by various financial/ non- financial institutions in the form of Term Loans, Working Capital Loans, non-convertible debentures, securitised products, commercial papers, inter-corporate deposits amongst others charges like processing fees, other fees, charges, service charges, commission, brokerage, rating fees, trusteeship fee, exchange listing fee etc. are levied to source the funds which shall be considered for the purpose of this model.
(c) Risk Premium: Base risk premium to cover business related risks and would vary by business, customer segment, geography, sourcing channel etc.;
(d) Tenor of the Loan & Payment Terms: Term of the loan, terms of payment of interest (viz. monthly, quarterly, yearly repayment); terms of repayment of principal etc.;
(e) Operational Expenses Cost: Operational expenses and costs include payroll cost, fixed and variable costs, sales and marketing costs, etc. that the Company incurs in relation to its operations and business;
(f) Internal Cost Loading: The costs of doing business and factors such as the complexity of the transaction, capital risk weightage, the size of the transaction, tenure, location of the customer and other factors that affect the costs associated with a particular transaction would be taken into account before arriving at the final interest rate quoted to a customer;
(g) Credit Risk: Credit loss (risk) cost would be factored into all transactions. The amount of credit risk cost applicable to a particular transaction depends on the internal assessment of the credit strength of the customer;
(h) Structuring Premium: A premium may be applied to a loan in case the loan has any significant structuring elements with respect to collateral, or other aspects of transaction structure;
(i) Mark-up Considerations: A markup to reflect other costs / overheads to be charged to the loan and our designed margin;
(j) Asset Liability Committee’s View & Market Dynamics: Recommendations of the Asset Liability Management Committee (hereinafter referred to as the “ALCO”) on product pricing with respect to changes in market benchmarks, prevailing interest rates offered by peer non-banking financial companies for similar products / services shall be taken into consideration. The forecasts and analysis of ‘what if’ scenarios’ conducted by the ALCO are also relevant factors for determining interest rates to be charged.
(k) Other factors, if any.

PRINCIPLES AND PROCEDURES FOR CHARGING SPREADS TO CALCULATE FINAL RATE

The rate of interest for loans for various business segments / products and various schemes thereunder is arrived after adjusting for spread by the relevant business segment. Factors taken into account by businesses for calculating spreads are as follows:
(a) Interest rate risk (fixed vs floating loan)
(b) Credit and default risk in the related business segment
(c) Historical performance of similar homogeneous clients
(d) Profile of the borrower
(e) Industry segment
(f) Repayment track record of the borrower
(g) Nature and value of collateral security
(h) Secured vs. unsecured loan
(i) Subvention available
(j) Ticket size
(k) Scores / details published by the Credit Information Companies
(l) Tenure of the loans
(m) Location delinquency and collection performance
(n) Customer indebtedness

APPROACH FOR GRADATION OF RISK

The risk premium attached with a customer shall be assessed inter-alia based on the following factors:
(a) Profile and market reputation of the borrower including usage of internal credit scoring models leveraging traditional approaches like bureau score as well as alternative data sources;
customer_grievance_redressal_mechanism.html (b) Inherent nature of the product, type / nature of facility, refinance avenues, whether loan is eligible for bank financing;
(c) Tenure of relationship with the borrower, past repayment track record and historical performance of our similar clients;
(d) Overall customer yield, future potential, repayment capacity based on cash flows and other financial commitments of the customer;
(e) Nature and value of primary and secondary collateral / security;
(f) End use of the loan;
(g) Nature and kind of securities / collateral including value of the assets offered as security, if any;
(h) Interest, default risk in related business segment;
(i) Regulatory stipulations, if applicable;
(j) Any other factors that may be relevant in a particular case.

RATE OF INTEREST

(a) Interest rate quoted shall be on annualized basis and shall be disclosed to the customer in Key Fact Statement (KFS) and sanction letter and any other documents as may be required.
(b) The interest shall be deemed payable immediately on the due date as communicated and unless otherwise expressly provided for in the loan documentation executed with the customer, no grace period for payment of interest is allowed.
(c) Interest rates offered could be on fixed rate basis or floating / variable rate basis.
(d) In case of floating / variable interest rates, the interest rates will be evaluated by the Asset Liability Committee (ALCO) and / or Board of the Company, from time to time.
(e) The rate of interest for the same product and tenor availed during same period by different customers may differ. The final lending rate applicable to each customer will be assessed based on various factors as detailed in this Policy.
(f) Annualised rate of interest to be charged to customer may be in the range as mentioned on the website and as communicated to the customer in the KFS, sanction letter or in any other communication as allowed in the loan agreement with the customer.
(g) Loan amount, annualised Rate of Interest and Tenure of loan will be communicated to the customer in the KFS and sanction letter and any other documents as may be required.
(h) Changes in interest rates would be decided at any periodicity, depending upon change in benchmark rate, market volatility, internal cost of funds, macroeconomic events, pandemic events, acts of God or war and competitor review.
(i) Intimation of change of interest or other charges would be communicated to customers. However, any changes to interest rate and charges shall be applicable prospectively.
(j) The interest re-set period for floating / variable rate lending would be decided by the Company from time to time.
(k) Claims for refund or waiver of charges / penal charges / additional interest would normally not be entertained by the Company, and it is at the sole discretion of the Company to deal with such requests on merit. Genuine refund claims are processed by the Company and any additional amount received in addition of due amount is refunded to the customers
(l) Claims for refund or waiver of fees / charges/ Penal Charges will normally not be entertained by the Company and it is sole discretion of the Company to deal with such requests.
(m) Taxation rules, as applicable, shall be complied with.

RISK CATEGORIZATION OF THE CUSTOMER

The Company shall determine the risk level associated with customers and charge the interest rate accordingly with a change in the risk premium. A classification of high, medium and low risk shall be followed, whose cut-offs and definition will vary depending on the product lines.

FEES & CHARGES

i. Company shall levy charges Penal Charges along with the applicable taxes for any delay or default in making payments of any dues or breach of terms and conditions (hereinafter referred to as “Penal Charges”) as outlined in the loan agreement and communicated to the customer in the KFS and sanction letter.
ii. The Penal Charges shall be levied to the customer in order secure the financial discipline from the Customers for complying with the terms & conditions agreed by the Customer at the time of availing facility from the Company. The said charges may vary across product category taking into consideration the amount of loan, tenure, industry segment, nature of default and any other factor as may be considered from time to time. The Penal Charges, if any levied to the Customer shall not be subjected to capitalization and shall not be compounded. In the event of levy of Penal Charges on account on payment default/ delays as per the Loan documents executed by the Customer, the said charges shall be levied only on the amounts under default and till the time such default continues. As and when Penal Charges are levied to the Customers, a communication to this effect shall be sent to the Customer through all the Communication modes as agreed with the Customer at the time of availing the Loan facility by the Customer.
iii. Besides interest and Penal Charges other financial charges like processing fees, cheque bouncing charges, NACH dishonour charges, , re-scheduling charges, pre-payment / foreclosure charges, re-credit charges, part disbursement charges, cheque swap charges, security swap charges, charges for issue of statement account etc., would be levied by the company wherever considered necessary and shall be communicated to the Customer in the sanction letter/ Key Fact Statement or any other document as may be required.
iv. Besides these charges, stamp duty, GST and other cess would be collected at applicable rates from time to time.
v. Any revision in these charges would be implemented prospective basis with due communication to customers. These charges would be decided upon by the respective business / function heads in consultation with operations, finance and compliance, or any committee as may be constituted and shall be approved by the Board for its implementation.

AUTHORITY

The Board (and upon its constitution, the ALCO) shall be responsible for deciding the macro and organizational parameters influencing the interest rates to be offered to the customers.

CONTENT ON THE WEBSITE

Appropriate disclosure regarding this Policy shall be made on the Company website.

IMPLEMENTATION

This Policy shall be effective from the date of adoption by the Board.

AMENDMENT

i. The Policy will be reviewed at yearly intervals or as and when considered necessary by the Board of the Company.
ii. Any change or amendment to this Policy shall at all times comply with the RBI Master Direction.