1.Introduction
The Reserve Bank of India (“RBI“) vide its Master Direction – Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025 dated November 28, 2025, as updated from time to time, (“RBC-MD“), requires non-banking financial companies to adopt an interest rate model, taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances. Respo Financial Capital Private Limited (“Company“) is a non-banking finance company that offers unsecured personal loans to its customers/ borrowers.
In order to ensure its standards of transparency, in conformity with the stipulations of the RBI’s directives and in compliance with the requirements of RBI mentioned above and the fair practices code adopted by the Company, the Company has adopted this interest rate policy for determining interest rates, processing and other charges and broadly outlining the interest rate model of the Company and the Company’s approach of risk gradation in this regard for its lending business (“Interest Rate Policy“).
This Interest Rate Policy should always be read in conjunction with RBI guidelines, directives, circulars and instructions, including the RBC-MD. The Company will apply best industry practices so long as such practice does not conflict with or violate applicable laws or RBI guidelines.
This policy applies to all loans originated through digital channels including through LSPs, and that Respo remains fully responsible for compliance with this policy regardless of the origination channel
This Interest Rate Policy applies to clients/ customers/ borrowers whose loans are booked in the Company.
2.Key Objective
- To arrive at interest rate to be used for different categories of borrower.
- Communicate the annualised rate of interest to the borrower along with the approach for gradation of risk and rationale for charging different rates of interest to different categories of borrowers.
- Make available the rates of interest and the approach for gradation of risks on the website of the Company.
3.Interest Rate Model and Risk Gradation
The interest rate to be charged to the borrower for the loans will be decided keeping in view the RBI’s guidelines.
- The interest rate offered to customers shall take into account the following components:
| Sr No | Component* | Description |
| 1 | Cost of Borrowings (COB) | The Company raises funds through Term Loans, Non Convertible Debentures etc. from various lenders / investors. The COB of raising such funds is considered for this component. This component is calculated as the weighted average rate of interest payable on all outstanding borrowings of the Company and also includes costs incurred by the Company for raising funds in the form of processing fees, brokerage to source funds, trusteeship fees, stamp duty, etc. This component might be different for each kind of borrowing. |
| 2 | Negative Carry | The Company keeps a liquidity buffer in the form of investments into liquid funds / fixed deposits to manage liquidity risk thus bearing negative carry on such investments. |
| 3 | Operating Costs | All operating costs associated with providing the Loan Products, including:
|
| 4 | Credit Risk Premium | The credit risk premium charged to the customer representing the default risk arising from loan sanctioned will be arrived at based on an appropriate credit risk rating/scoring model and after taking into consideration expected losses. The credit risk premium is therefore calculated to cover the potential credit loss risk. The judgment of the credit costs of customer segments is compared against actual and anticipated performance on an ongoing basis. Details on risk gradation are covered under clause 3. |
| 5 | Expected Return on Assets | The Company proposes to use expected return on assets corresponding to each Loan Product in its interest rate model, to ensure sustainability of its business operations, while ensuring the interest rates charged to customers are fair, reasonable and transparent |
*Note:- All interest rate components are annualized.
- The Company charges a fixed interest rate to Personal Loan customers. This interest rate does not change during the tenure of the loan. The rate of interest charged to each customer is computed by adding the values of all components of the Interest Rate Model as mentioned above. The final interest rate charged to a customer will be equal to:
Rate of Interest charged to the customer =
COB + Negative Carry + Operating Costs + Credit Risk Premium + Expected Return on Assets
2.1 COB, Negative Carry, Operating Costs, and Expected Return on Assets remain constant and do not change on a customer basis. Only the credit risk premium will vary based on the customer segment and it will be determined on the basis of a risk gradation as outlined in sub-clause 3 below.
2.2 Based on the interest rate model, as aforesaid, the minimum and maximum interest rate charged to the customers for Personal Loans shall be 18% per annum and 34% per annum
2.3 Loans are offered starting from 21% APR (Annual Percentage Rate). APR represents the annualized cost of borrowing inclusive of the interest rate and all applicable fees and charges (including processing fees). The exact APR applicable to a customer will be disclosed in the Key Fact Statement (KFS) provided prior to loan execution.
2.4 Notwithstanding the interest rate model and the minimum and maximum rates set out above, the Company may, for certain products, charge a nil rate of interest and instead recover its return through a processing fee. For such products, the processing fee is determined on the same risk-gradation basis set out in clause 3 below, and the effective annualized cost of credit to the borrower, inclusive of such processing fee, is captured and disclosed as the Annual Percentage Rate (APR) in the Key Fact Statement and the sanction letter provided to the borrower prior to disbursal.
- The risk gradation applicable to a customer basis which the credit risk premium will be assessed based on the following factors:
- profile of the borrower including income of such borrower,
- Repayment capacity of the borrower based on cash flows and other financial commitments of the borrower,
- external credit score/ rating of the borrower e.g. Bureau score and credit history,
- performance of the borrower with respect to other/ past loans availed by the borrower from the Company and/or other financial institutions,
- Credit and default risk of the borrower,
- loan amount, loan tenure and the loan product, and
- the acquisition source of the customer , being a factor which the Company’s internal portfolio data demonstrates to be a statistically significant indicator of the borrower’s repayment behaviour and default risk. The acquisition source of the customer risk is applied only as a component of the credit risk premium and not as an independent charge.
- The Company’s use of the risk-gradation factors set out above is supported by the Company’s internal credit-risk analysis. Such analysis, demonstrating the predictive value of each factor in relation to repayment behaviour and default risk, shall be reviewed periodically by the Risk Management Committee, retained by the Company, and made available to the Board and to the Reserve Bank of India on request. No factor shall be applied for risk gradation unless it is supported by such analysis and disclosed in this Policy.
- The Company shall assign borrowers to risk segments based on the objective risk gradation factors set out above. Borrowers falling within the same risk segment shall be charged the same credit risk premium and corresponding rate of interest. Any difference in the credit risk premium or rate of interest shall be based only on the risk gradation factors disclosed in this Policy.
- All risk-gradation factors applied by the Company shall be objective, risk- or cost-based, and applied consistently across borrowers within the same risk segment. The Company shall not determine or vary the rate of interest on the basis of religion, caste, gender, or any other ground unrelated to the borrower’s credit risk or the Company’s cost of lending. The Company shall not discriminate in extending loan facilities to physically or visually challenged applicants on grounds of disability.
- The borrower is charged an annual rate of interest, details of which are specified on the Company’s website, as updated from time to time.
- The Company will follow appropriate internal principles and procedures, in line with applicable laws and regulations, in determining interest rates, processing fees and other charges in line with this Interest Rate Policy.
- The decision to give a loan and the rate of interest thereon are carefully assessed in accordance with this Interest Rate Policy based on multiple factors which include the borrower’s cash flows, credit and default risk associated with borrower, other financial commitments, credit record etc. Such information to make the assessment is gathered based on personal information (age, employment type, income etc.) provided by the borrower, credit report, market intelligence and any other information as available to Respo.
The Company will follow the interest rate model adopted and approved by the board of directors (“Board“) in this Interest Rate Policy and will be made available on the website. The rate of interest and the approach for gradations of risk and rationale for charging different rate of interest to different categories of borrowers will be disclosed in the application form and communicated explicitly in the sanction letter.
- Interest rate would be intimated to the borrower at the time of sanction / availing of the loan. The interest rate charged to borrower is subject to change as per (i) any change in applicable laws; (ii) regulations and directions issued by RBI; or (iii) the variables set out in this Interest Rate Policy. Any change in interest rate charged or Late Payment Penalty Charges will be communicated to the customer separately and will only be applicable prospectively. These communications are done in a language understood by the customer. Any updates with respect to rates of interest, approach for gradation of risks will be reflected on website of the Company and on other platforms where such information may be displayed.
- The loan terms including the loan amount, annualized Percentage Rate , Late Payment Penalty Charges, and other relevant charges payable to the borrower through the life of the loan will be disclosed in the key fact statement, sanction letter and the loan agreement. This ensures complete transparency on costs associated with the loan.
- The rate of interest will be annualized rate so that the borrower is aware of the exact rates that would be charged to the account.
- The company shall provide a cooling-off period of not less than 1 (One) day from the date of loan disbursal to all borrowers. Within this period, the borrower may exit the loan by repaying the principal and the proportionate Annual Percentage Rate (APR) without any penalty or pre-payment charges. The exact APR applicable will be disclosed in the Key Fact Statement (KFS) provided to the borrower prior to loan disbursal.
- The Company will share/ make accessible to its customers, through appropriate channels, a simple and easy to understand statement at the end of each quarter which will at the minimum, enumerate the principal and interest recovered till date, EMI amount, number of EMI’s left and annualized rate of interest/ annual percentage rate (APR) for the entire tenor of the loan.
- The Company will ensure that the charging of interest is from the date of actual disbursement of the funds to the customer and not from the loan sanction date, agreement signing, or cheque issuance. In the case of loans being disbursed by cheque /DD, interest shall be charged from the date of handover of cheque /DD. This ensures customers are billed only for the period in which they have access to the funds.
- Interest on all Loan Products is calculated on a pro-rata basis for any partial-month loan disbursal or repayment, ensuring that interest is charged only for the period the loan is active. Interest is charged on the principal outstanding. Overdue Interest on a delayed EMI is charged on the overdue amount (principal and interest comprised in the unpaid EMI), as set out in Clause 5.
- In the case of disbursal or repayment of loans during the course of the month, the Company will charge interest only for the period for which the loan was outstanding.
- If the Company is collecting one or more instalments in advance, it will ensure not to reckon the full loan amount for charging interest.
4.Fees and Charges
Other financial fees and charges for the loans like processing fees, operating charges like mandate bouncing charges, late payment penalty charges, etc., would be decided by the internal working group (consisting of the CEO and any one of the CRO, CFO, COO) (“Internal Working Group“) approved by the Board of Directors of the Company, considering market practices and legal charges like stamp duty, service tax and other cess would be collected at applicable rates from time to time and would be decided upon by the Internal Working Group. It is clarified that the Internal Working Group determines fees within a Board-approved range, and that any material changes to fees are reported to and ratified by the Board. Further, no pre-payment or foreclosure charges are levied on the Borrowers.
All penalties charged to customers for late repayment shall be outlined in bold in the loan agreement. Further, the quantum and reason for Late payment penalty charges shall be clearly disclosed by the Company to customers in the loan agreement and in the Key Facts Statement. Whenever reminders for non-compliance of material terms and conditions of the loan agreement are sent to customers, Late Payment penalty charges along with their instance of levy and reason shall be communicated.
Further, with respect to implementation/ levy of fees and charges, the Company will ensure that:
- A clear and transparent communication is made to the customer about all fees and charges as part of loan agreement/ sanction letter;
- Any upfront fees and charges that is not communicated in the agreement should not be imposed on the customer for availing the loan product; and
- Any change in contingent / service charges or introduction of new contingent / service charge should be implemented only prospectively except for change on account of regulatory/ statutory changes.
5.Details of Charges
| Fee/Charge * | Description | Loan Amount with computation examples |
| Processing Fees | Charges levied for processing the loan, covering verification, approval, and administrative costs upto 6% based on borrower’s risk segment as assessed under Clause 3 of this Policy. For nil-interest rate, fee-based products referred to in clause 2.4, the processing fee may be up to 11% of the loan amount and forms part of the APR disclosed in the Key Fact Statement. | If the loan amount is ₹1,00,000 and the processing fee is 2%, then ₹2,000 will be charged. |
| Late Payment Penal Charges** | Daily penalty for EMI payments made after the due date. Based on overdue amount:
It is clarified that Late Payment Penalty Charges is not Overdue Interest, shall not be capitalised and no further interest shall be computed on them and reasonable and commensurate with the default. |
If overdue amount is ₹5,000 and penalty is ₹12/day, then for 5 days of delay, ₹60 is charged. |
| Insurance Charges | Charges for insurance products bundled with the loan (e.g., life insurance), protecting both borrower and lender. On actuals. Such insurance is completely optional for the customer. | If an insurance premium of ₹350 is applicable, then ₹350 is charged. |
| Overdue Interest** | Interest on the overdue amount (being the principal and interest comprised in the unpaid EMI), at the contracted Rate of Interest (and not any enhanced or additional rate), from the Due Date until full and final payment of the unpaid amounts. Overdue Interest represents interest for the period the Borrower is in delay and compensates the Lenders for being deprived of the use of the overdue amount; it is not a penal charge and shall not be capitalized. Overdue Interest is separate from Late Payment Penalty Charges. | If overdue principal and interest is ₹10,000 with an applicable interest rate of 24% per annum, daily interest would be ₹6.57. |
*Note: Applicable taxes, as applicable and other cess would be levied on such charges.
**Claims for refund or waiver of Late Payment Penal Charges / Overdue Interest would be at the sole discretion of the Company.
6.Disclosure
Appropriate disclosures, in line with the RBC-MD, regarding this Interest Rate Policy will be made on the Company website.
7.Policy Review
This Policy shall be reviewed at least annually by the Board and may be amended, modified or revised from time to time in accordance with applicable laws, regulatory requirements and business needs. Any amendment, clarification, circular or direction issued by the RBI or any other applicable regulatory authority shall automatically apply to this Policy and prevail in case of any inconsistency, until the Policy is accordingly updated.
