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1. PREFACE OF THIS POLICY

The Reserve Bank of India, Master Direction - Non-Banking Financial Company -Non Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016 dated 1st September 2016, as amended from time to time (RBI Regulations), had advised the Boards of Non-Banking Financial Companies (NBFCs) to outline appropriate internal policies and procedures to define their interest rates, processing fees, and other charges. The Direction was issued as a measure against the increasing complaints the Bank received against excessive interest rates and other charges levied by NBFCs on certain loan products.

The board of directors of ROYAL SECURITIES LIMITED (henceforth referred to as "Company" or "RSL") has designed a detailed interest rate policy (“the Policy”) in accordance with the master direction issued by the Reserve bank of India (including amendments thereof) to disclose their internal guiding principles, interest rate model, rate of interest, gradations of risk and rationale for charging different rate of interest to their borrowers.

The Company shall take this Policy into consideration while making all of its decisions regarding the determination of interest rates and other charges applicable to its loan offerings.

2. OBJECTIVE OF THIS POLICY

The primary objective behind drafting and adopting this policy is to decide on the principles, methodology and approach of charging spreads to arrive at final rates charged from customers and define the standard interest rates to be followed for different customer segments and loan offerings.
The RSL through this policy charge interest rates determined in a manner as to ensure the long-term sustainability of the business by taking into account the interests of all stakeholders and developing and adopting a suitable model for the calculation of a reference rate.

3. INTERNAL RESPONSIBILITIES

a) Board of Directors:

The Board of Directors of the Company shall oversee this Interest Rate Policy and ensure its effective implementation. Further, the Board may delegate the responsibility of implementation of this Policy and other functioning aspects to the Chief Compliance Officer/Executive Director /or Committee as it deems fit.

b) Asset Liability Committee:

ALCO shall be responsible for taking decision to change the spreads. The ALCO meeting will be held on a half-yearly basis and any changes / status quo in the spreads would be discussed and decided by the members of the ALCO and would be put up to the Board in subsequent meeting. Business can have their internal pricing policies under the overall framework of board approved interest rate policy for company in deciding the spreads to arrive at final rate. Changes to business level internal pricing policies, if any, would need to be approved jointly by any -two officers of
the Company as per the matrix below:

4. INTEREST RATE MODEL

The company lends its loans to clients shall be on Fixed Rates.
“RSL” being a diversified NBFC is engaged in the business of lending money through various products to cater to the needs of different customer segments. The primary target audience for the Company’s offerings include:
• Salaried Individuals
• Students
• Proprietor
• Partnership Firm
• Micro Businesses
• MSMEs
• Entrepreneurs
The interest rate shall be calculated by the Company after taking into account, factors such as cost of funds, margin, credit risk, Opex Cost, and other costs such as administrative expenses and profit margin. The Company shall also review this base interest rate periodically.
Further, the Company shall determine the interest rate applicable to each loan account based on different yardsticks such as tenure of the loan, borrower’s profile, borrower’s repayment capacity, past repayment track record of the borrower, etc.

5. ESTABLISHING THE INTEREST RATE

The interest rate applicable to different loan products of the Company shall be determined by taking the following aspects into consideration:

a) Tenure and Terms of the Loan:

The interest rate shall depend on the duration for each a loan has been extended to a borrower (viz. monthly, quarterly and yearly repayment) as well as the different terms of repayment laid down in the Loan Agreement.

b) Internal and External Costs of Funds:

The rate of interest charged shall also depend upon the rate at which the funds are sourced to extend the loan facilities to customers, commonly known as the external cost of funds and shareholders of the company also infused the capital in the company in huge proportions and accordingly the cost of such capital being infused shall be taken into consideration while determining interest rate commonly known as the internal cost of fund.

c) Internal Cost of Operations:

The interest rate will also depend upon the Company’s costs of conducting its business. This cost of doing business/operations includes Technology infrastructure cost, manpower cost, infrastructure cost and other administrative costs such cost is known as Opex cost.

d) Credit Risk

The credit risk is related to loss of credit due to following factors such as the complexity of a loan transaction, size of the loan, geographical condition, customer segment, sourcing channels, stability in earnings and employment, financial position, past repayment track record and other factors that affect the costs associated with a particular loan account shall be taken into account before informing the final interest rate to a borrower.

e) Profit Margin

The fair profit margin is on the basis of the return expected by the shareholders and the risks involved. The profit margin shall be reasonable to attract fresh capital to sustain growth and be benchmarked with comparable companies. A reasonable level of gearing shall be maintained while arriving at the shareholder return.

f) Prevailing Market Practices

The Chief finance Officer/Executive Director /or AL Committee as it deems fit may also recommend a rate of interest-based on the fluctuations in market trends, interest rates levied by other existing NBFCs for similar loan products or services, etc.

6. ADDITIONAL CHARGESE

Besides interest, the Company may levy additional financial charges such as loan processing fees, ,cheque bounce charges, ESC failure charges, penal interest charges, pre-payment/foreclosure charges on fixed interest loans, late payment fees, etc., wherever considered necessary.

Any change in the charges will inform borrowers in advance and apply prospectively.

The company can also levy penal charges or/and penal interest generally up to 2% per annum on the outstanding amount, as may be decided by the board of directors on delayed payment of instalments.

7. OTHER PROCEDURAL ASPECTS

The Company shall adhere to the following procedural aspects with regards to the rate of interest charged on its different loan offerings:

a) In compliance with its Fair Practices Code, the Company shall disclose the rate of interest and its application form as well as in its Loan Sanction Letter explicitly.
b) The Company shall inform the borrower about their loan amount; annualised rate of interest and other details of the loan at the time of sanctioning the loan.
c) Other charges such as processing fees, additional interest charged on delayed payments and cheque bouncing charges shall also be mentioned in the Loan Agreement and sanction letter.
d) The annualised rate of interest shall be intimated to the borrower so that they are aware of the exact rates charged to the account.
e) The Company shall display its interest rate policy and interest rate structure for each loan product on its website.
f) The Company shall inform its customers about any increase in fees or charges via different communication channels such as SMS, email, website updates, publishing in appropriate newspapers, etc., at least one month prior from the date on which such change shall take effect.

8. REVIEW OF THIS POLICY

This Policy shall be reviewed by the Company’s Board of Directors annually, or as and when any changes are necessitated to the Policy. The Chief Compliance Officer/Executive Director /or Committee may suggest changes or modifications to the Policy and present it before the Board for its approval and adoption.