Interest Rate Policy

Background:

In accordance with the guidelines set forth by the Reserve Bank of India (RBI), each Non-Banking Finance Company (NBFC) is required to have its Board approve an Interest Rate Model, taking into consideration factors such as the cost of funds, margin, and risk premium. The approved model must determine the interest rates for loans and advances. Furthermore, it is mandated that the rate of interest, the approach for risk gradation, and the rationale for charging varying interest rates for different borrower categories are communicated to the borrowers through sanction letters. The Board of Directors, in its meeting on January 01, 2024, formally adopted the revised interest rate model for Datson Exports Limited, a NBFC disbursing short-term, small amount loans to individual borrowers via its digital lending platforms, 'Creditt' and 'Creditt+'.

Objective of the Policy:

The primary objective of this policy is to establish benchmark rates for different customer segments and to define principles and approaches for charging spreads, thereby determining the final interest rates for customers.

Review of Policy:

This policy will undergo an annual review or interim reviews as needed due to changes required in the model, such as additions or deletions of components forming part of the benchmark calculation.

Organization Structure:

The Board of Directors holds the responsibility for the effective implementation of the Interest Rate Model within the company.

Qualifying Conditions for Loans:

To qualify for a loan, applicants must be Indian residents aged between 21 and 55, employed with a minimum wage of Rs. 20,000.

Interest Rate Model:

The interest rate for loans and advances to individual borrowers will range between 0.30% to 0.60% per day. This daily interest rate is calculated based on the customer's profile, particularly focusing on those categorized as highly risky and underserved within the community.

Standard Rate of Interest and Schedule of Charges

* From third quarter 2023 onwards company has revised processing charges for first time borrowers/customers.

^There are no hidden charges.

Calculation of Annual Percentage Rate or Total Cost of Credit-

The Annual Percentage Rate (APR) of loan is the total annual cost of the loan/ credit in percentage terms. This is deemed to be giving actual cost of the loan/ credit on per annum basis.

Typically, APR is calculated as under:

APR = ((Interest + Fees / Loan amount) / Number of days in loan term)) x 365 x 100

Where ‘Interest’ is total interest to be paid during the loan tenure. Thus, the APR/ total Cost of Credit can be calculated based on the applicable rate of interest and applicable fee/ charges which have been disclosed in Sanction Letter as well as in Key Fact Statement and it can be used by the customers to compare the costs associated with borrowing across products and/or lenders.

Example:

Approach for Gradation of Risk

The rate of interest shall be determined based on the cost of borrowed funds, matching tenor cost, market liquidity, refinance avenues, RBI repo rate, offerings by competition, tenure of customer relationship, cost of funds etc.

In addition to the cost of funds, the rate of interest shall further be determined with risk premium which is based on the inherent credit and default risk in the products and customer per se arising from customer segment, profile of the customers, professional qualification, stability in earning and employment and repayment ability, overall customer yield, nature and value of primary and collateral securities, past repayment track record of the customers, external ratings of the customers, industry trends etc.

Datson may adopt an interest rate model whereby the rate of interest for same product and tenor availed during same period might differ from customer to customer depending upon consideration of any or combination of a few or all factors as listed above. Hence, the interest rate applied may be different from customer to customer on his/ her loans.

What are the factors that affect Interest Rates:

• Credit Bureau Scores

• Tenure of Loan

• Income

• Occupation

• Repayment History

• Default risk/risk premium

• Any other factors that may be relevant in a particular case

Communication Framework

Interest rates would be intimated to the customers at the time of sanction/availing of loan.

Interest rate policy would be uploaded on the website of the company.