INTEREST RATE POLICY
The Reserve Bank of India vide its circular No. Ref. No. DNBS.PD/ CC. No. 95 /03.05.002 /2006-07 dated May 24, 2007 had adviced Boards of NBFCs to lay out appropriate internal principles and procedures in determining interest rates. This was reiterated vide RBI’s circular Ref. No. RBI/2008-09/337/DNBS(PD)/CC. No. 133/03.10.001/2008-09 dated January 2,2009.
In compliance with the requirements of the RBI Regulations mentioned above and the Fair Practices Code of APAC, APAC has adopted this Interest Rate Policy broadly outlining the Interest Rate Model and risk gradation approach.
Interest rates offered could be on fixed rate or floating rate basis.
A. Fixed Rates
At present the annualised rate of Interest* to be charged to customers, at the time of sanctioning loans, shall be in the range as mentioned below:
|Lending Assets/Sector||Range of Interest|
|Small & Medium Enterprise Business||10% to 25%|
|Retail Business Loan||12% to 40%|
|Micro Enterprise Loans, LAP and Home Loans||12% to 24%|
|Other Loans||12% to 40%|
*in exceptional circumstances, based on risk perception, this may fall outside the indicated range.
B. Floating Rates
In case of floating interest rates, the interest rates will be benchmarked as under:
The interest rates charged by APAC shall be linked with the APAC Prime Lending Rate (APAC PLR) or any other benchmark as may be agreed with the customer. APAC PLR shall be determined from time to time by the ALRPCO (Asset Liability Management and Resource Planning Committee) on the basis of cost of borrowing, operating costs, liquidity, interest rate trend and return on equity thresholds.
Spread (Plus or Minus) over APAC PLR will be determined on the basis of nature and duration of loan, nature of security, credit worthiness, risk perception and competition.
Intimation of change of interest would be communicated to customers in a manner deemed fit, as per terms of the loan documents. Any revision in interest would be with prospective effect.
In case of staggered disbursements, the rates of interest would be subjected to review and the same may vary according to the prevailing rate at the time of successive disbursements or as may be decided by APAC.
Currently APAC’s PLR is 18% p.a.
Loan amount, annualised rate of interest, tenure of loan and the apportionment of installments will be communicated to the customer in the sanction letter.
Besides normal Interest, APAC may levy additional interest for adhoc facilities, penal interest/default interest for any delay or default in making payments of any dues. The details of penal interest charges will be mentioned in bold in the loan agreement and sanction letter.
Besides interest, other financial charges like processing charges, cheque bouncing charges, pre-payment charges, cash handling charges, RTGS/other remittance charges, commitment fees, charges on various other services like issuing no due certificates, no objection certificate, letters ceding charge on assets/ security, security swap & exchange charges etc. would be levied by APAC wherever considered necessary. In addition, the Goods and Services Tax and other taxes, levies or cess would be collected at applicable rates from time to time.
Claims for refund or waiver of charges/ penal interest/additional interest would normally not be entertained by APAC. It is the sole and absolute discretion of APAC to deal with such requests, if any.
The risk premium for a customer shall be assessed on the basis of the following factors:
Profile and market reputation of the customer,
Inherent nature of the product, type / nature of facility, refinancing avenues, loan eligibility for bank financing, loan to value of asset financed,
Tenure of relationship with the customer group and past repayment track record,
Group strength, future potential, repayment capacity based on cash flows and other financial commitments of the customer,
Nature and value of primary and secondary security,
Type of asset being financed, end use of the loan,
Interest, default risk in related business segment,
Regulatory stipulations, if applicable,
And any other factors that may be relevant in a particular case.
This policy shall be reviewed on a yearly basis in April of each year. However, depending on requirements, the reviews may be done at shorter intervals. Any changes in the policy except as required by legal and regulatory changes shall be made with the approval of the Board.