Interest Rate policy

1. Preamble and Regulatory Basis

  • The Company is a Non-Banking Finance Company (NBFC) engaged in lending as its principal business.
  • In line with RBI directions requiring each NBFC's Board to approve an Interest Rate Model Policy to:
    • Define the reference/benchmark rate and pricing approach,
    • Set product-wise ranges and ceilings,
    • Lay down computation methods,
    • Specify governance, deviations, and review.
  • This Policy is approved by the Board of Directors and any revision is approved by the Board and implemented prospectively.

2. Objective

  • Arrive at benchmark/reference rates and risk-based spreads to determine final rates charged to customers.
  • Ensure transparent, reasonable, and sustainable interest rates in line with RBI regulations and Fair Practices Code.
  • Maintain consistency with approved practices for both digital/short-tenor lending and MSME/secured lending.

3. Product Coverage

This Policy applies to all lending products of the Company, including:

  • Digital/Short-Tenor Personal Loans
  • MSME Unsecured Business Loans
  • Secured/Unsecured Personal Loans
  • Any new product introduced post Board approval

4. Interest Computation Methodology

a) Daily Basis Calculation

  • Interest is calculated on the daily outstanding balance at the applicable rate.
  • If the annualized interest rate is R%, the daily interest is computed on a 365-day basis.

b) Minimum Period

  • Minimum interest chargeable shall not exceed one day. Interest is calculated on actual daily outstanding.

c) Compounding

  • Amortizing loans accrue interest on monthly reducing balances as per loan schedule. For short-tenor/digital products, interest is typically simple. Overdue interest is not compounded; only disclosed late charges/fees apply.

d) Fixed/Floating

  • Loans are ordinarily sanctioned at fixed rates for the contracted tenor. Any floating-rate product requires explicit disclosure of the benchmark and spread.

5. Annualized Rate of Interest and APR Disclosure

  • All interest rates communicated shall be annualized (APR) in sanction letters, KFS.
  • The Company does not compound penal interest; only disclosed late charges/fees, if any, are levied on overdues.

6. Pricing Model and Corporate Ceiling

  • RR is determined considering:
    • Weighted Average Cost of Borrowings (banks/NBFCs/NCDs/CPs),
    • Fund-raising costs (processing fees, placement/ rating/ trusteeship/listing),
    • Liquidity buffer/negative carry on investments,
    • Operating costs (people, technology, sourcing/recovery, admin),
    • Expected credit loss (ECL)/risk premium,
    • Target pre-tax ROA and fair RoCE,
    • Competitive conditions and portfolio strategy.

7. Fees, Charges, Concessions, and Cooling-Off

  • Fees and charges (e.g., login/processing, registration/stamp duty, CERSAI, documentation, bounce/NACH, late charges, prepayment/foreclosure, statements/NOC, insurance where applicable) are:
    • Defined in the Schedule of Charges,
    • Disclosed in the KFS and sanction letter,
    • Levied prospectively and in compliance with law.
  • Targeted concessions/rebates (e.g., for specific segments or conduct) may be offered per approved programs and are non-discriminatory.
  • A cooling-off/look-up period is provided during which a borrower may exit by repaying principal and proportionate APR without penalty; details are disclosed in the KFS/sanction.
  • No undisclosed charges are levied. Any ancillary product (e.g., insurance) is optional unless mandated by law and is disclosed on actuals.
  • Overdue/penal amounts are treated as charges, not additional interest, are not capitalized, and do not compound.

9. Monitoring, MIS, and Audit

  • Internal Audit periodically reviews adherence to this Policy, disclosures, approval trails, and fee application.

10. Review and Amendments

  • Reviewed at least annually or earlier upon material regulatory/market changes; revisions are Board-approved and applied prospectively.
  • The current policy are published on the Company's website.

11. Grievance Redressal

  • Customers may contact the Company's Grievance Redressal Officer:

Vijender Kumar Rana, Director

Email: vkrana@mountshikhar.com

Phone: 99587 59393

  • Complaints are acknowledged promptly and resolved within regulatory timelines through phone/email/portal channels.