Disclosures

Interest Rate Policy

Gandra Fincorp Private Limited

Policy on Interest Rate and Other Charges

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Introduction

Gandra Fincorp Private Limited ("GFPL" or the “Company”) is a non-deposit taking Non-Banking Financial Company (Investment and Credit Company), registered with the Reserve Bank of India (RBI) and classified under the Base Layer category. The Company is engaged in the business of extending corporate and business loans.

In accordance with the RBI’s Responsible Business Conduct Directions, 2025, and other applicable regulatory prescriptions governing NBFCs, the Board of Directors is required to lay down internal principles and procedures for:

Determination of interest rates;
Risk-based pricing and gradation;
Levy of processing fees, penal charges and other charges; and
Transparent disclosure to borrowers.

This Policy sets out the Company’s Board-approved framework for pricing of credit facilities, risk gradation methodology, computation of Annual Percentage Rate (APR), levy of penal charges, foreclosure charges, and related disclosures. The Policy is designed to ensure fairness, transparency, proportionality, and regulatory compliance.

Objective

The objectives of this Policy are to:

Establish principles for determination of interest rates based on cost, risk and return considerations.
Define a structured risk gradation framework for differential pricing.
Ensure fairness and non-discrimination within product categories.
Prescribe a transparent framework for penal charges and other fees.
Ensure full disclosure of pricing components, APR, and charges through sanction documents and KFS.
Promote responsible lending and sustainable portfolio management.

Business Overview

Customer Segment

The Company primarily caters to the financing needs of the MSMEs and business borrowers across India, including:

Self-employed professionals
Self-employed non-professionals
Non-individual applicants – private limited companies, public limited companies, and partnership firms/LLPs

Product Profile

Currently, the company provides secured business loans to individuals and non-individuals. The business loans shall be secured by either immovable property or movable property like stock, raw materials, inventory, etc.

Distribution Model

The Company distributes its products through its direct sales teams operating from the Company branches.

Cost Structure Considered in Pricing

GFPL factors both upfront and ongoing costs into loan pricing model to ensure full cost recovery and sustainable profitability. The Company classifies these costs as follows:

Upfront Costs

The Company incurs these costs prior to loan disbursement, including:

Acquisition Costs – Expenses related to sales channels and promotional activities.
Verification Costs – Costs of verifying information provided in the loan application, including residence, employment, and credit bureau checks.
Credit Appraisal Costs – Expenses incurred in deploying qualified resources to assess borrower creditworthiness.
Legal and Valuation Charges – Costs for title verification, legal opinions, and valuation of collateral for secured products such as loan against property or machinery finance. The Company may recover part of these expenses through non-refundable application fees.
Technology Costs – Investments in hardware, software, data storage, analytics, and related infrastructure to support efficient operations, customer service, and regulatory compliance.

Certain upfront costs may be recovered through non-refundable application or processing fees.

Ongoing Costs

The Company incurs these costs during the tenure of the loan, including:

Funding Costs – Costs associated with raising and managing debt and equity capital, including interest and related expenses.
Servicing Costs – Expenses for managing loan accounts, processing repayments, maintaining records, and providing borrower support.
Collection Costs – Costs incurred in collection and recovery activities in cases of borrower default.
Customer Service Costs – Expenses related to handling borrower requests such as statements, certificates, and account updates.
Management Costs – General administrative and operational overheads, including IT infrastructure and software licenses.
Record-Keeping Costs – Expenses for secure storage and retrieval of physical or digital loan documentation.

Interest Rate Determination Framework

Pricing Philosophy

The Company follows a risk-based pricing approach. Interest rates shall be determined based on objective, risk-sensitive and commercially prudent parameters.

Although the Reserve Bank of India has not prescribed a maximum cap on interest rates, the Company shall ensure that rates are:

Not excessive or usurious;

Aligned with prevailing market conditions;

Justified by cost and risk considerations.

Components of Interest Rate

The Company shall price loans as:

Interest Rate = Base Rate + Risk Premium + Customer Spread.

Base Rate

The Base Rate reflects:

Cost of borrowed funds;
Cost of equity (risk-adjusted expected return);
Operating and overhead expenses;
Minimum target return on assets.
Risk Premium

The Risk Premium compensates the Company for portfolio-level and segment-level credit risk and incorporates:

Industry risk;
Historical delinquency levels;
Macroeconomic considerations;
Collateral profile.
Customer-Specific Spread

The final spread is determined based on borrower-specific parameters such as:

Credit bureau score and repayment history;
Financial profile and leverage;
Loan-to-Value (LTV);
Tenor and structure;
Nature and quality of collateral;
Existing relationship and performance;
Geographic and sectoral exposure;
Competitive positioning.

The Company is not required to standardize interest rates for identical products and tenors and may differentiate rates based on risk gradation.

Interest Rate Structure

GFPL offers loan products at fixed and/or floating interest rates. The Company links floating rate loans to its internal Base Rate, as described above. The Company determines fixed interest rates using the same principles applicable to floating rate loans, with the addition of an interest rate risk premium that reflects expected interest rate volatility over the loan tenure.

Indicative Interest Range

The applicable rate of interest may range from a minimum of 18% p.a. to a maximum of 26% p.a., subject to risk gradation and internal assessment. The Company may revise the indicative range from time to time. In specific cases, rates may vary based on internal assessment and commercial considerations.

The Company may charge interest on a monthly or quarterly basis, depending on the product or segment. The Company may also introduce special promotional rates from time to time. The borrower shall pay interest on or before the due date as communicated in the loan documentation.

Approach for Gradation of Risk

GFPL adopts a structured risk-gradation framework to support prudent lending and protect the quality of its loan portfolio. The Company evaluates the following factors while determining customer spread and risk premium:

Interest rate structure (floating vs. fixed)

Borrower profile, reputation, and market standing

Length of relationship with the borrower group and past repayment history

Repayment track record and historical performance of comparable borrowers

Nature and value of collateral and additional security

Borrower’s financial flexibility and existing indebtedness

Type of asset financed and end use of the loan

Competitive pricing in the market

Business risk, industry risk, market position, business vintage, and competition

Industry segment and geographic location of the borrower

Loan-to-value (LTV) ratio

Headroom required for potential tenor elongation or EMI increase due to benchmark rate changes

Availability of subvention or any other relevant factors specific to the case

The Company may vary the applicable interest rate for different borrowers or segments based on one or a combination of the above factors. The Company need not standardize interest rates for identical products and tenors across all borrowers. The Company shall disclose the applicable interest rate, the risk-gradation approach, and the rationale for differential pricing in the application form and explicitly communicate the same in the sanction letter issued to the borrower.

Penal and Other Charges

Penal Charges

GFPL may levy penal charges for non-compliance with material terms and conditions of the loan contract. While leaving penal charges shall ensure:

The Company shall not levy such charges in the form of penal interest added to the applicable interest rate, and shall not capitalize penal charges or compute further interest on such charges. This shall not affect the normal compounding of interest applicable to the loan account.
The Company shall not introduce any additional component to the rate of interest without borrower consent.
The Company shall not charge additional / fresh penal charges on top of already outstanding penal charges.
Where loans remain unpaid on due dates or borrowers breach material contractual terms, the Company shall levy penal charges at uniform rates across product portfolios, as disclosed in the customer agreement and Key Fact Statement (KFS).
The Company shall levy applicable taxes separately, unless the loan agreement specifies otherwise.
The Company shall ensure that penal charges remain reasonable and proportionate to the nature of the non-compliance, and do not discriminate within a particular loan or product category.

The Company may treat the following events as non-compliance of material terms and conditions and may levy penal charges accordingly:

Delay in or failure to create security in favour of the Company.
Non-payment or delay in payment of EMI.
Breach of financial covenants specified in the loan agreement.
Dishonour of repayment instruments submitted by the borrower.
Breach of any other covenant prescribed in the loan agreement.

In all cases, the Company shall not levy penal charges exceeding 3% per month of the overdue amount, whether singly or cumulatively, for the specified non-compliance.

Foreclosure Charges

GFPL may may levy foreclosure or pre-payment charges in accordance with applicable regulatory requirements and this Policy, subject to the following conditions:

The Company shall not levy foreclosure or pre-payment charges on floating rate loans extended to individual borrowers or Micro and Small Enterprises (MSEs) for business purposes where the sanctioned amount is up to INR 50 lakh. For sanctioned amounts above INR 50 lakh, the Company may levy pre-payment charges as per its Board-approved Schedule of Charges.
The Company may levy pre-payment charges on fixed rate loans across all borrower categories and purposes, including loans to individuals (personal or business use), MSEs, and non-MSEs, irrespective of loan amount, in accordance with the Schedule of Charges.
The Company may levy pre-payment charges on floating rate loans extended to non-MSE borrowers, subject to its approved policy and applicable guidelines.
Where pre-payment charges apply, the Company shall not differentiate such charges based on the source of funds used for pre-payment or whether the repayment is partial or full.
For dual or special rate loans, the Company shall determine the applicability of pre-payment charges based on whether the loan carries a fixed or floating rate at the time of pre-payment.
For term loans, the Company shall compute pre-payment charges on the amount prepaid by the borrower.
The Company shall not levy pre-payment charges retrospectively or where the Company itself initiates pre-payment.
The Company shall clearly disclose applicable pre-payment charges to the borrower in the loan agreement and KFS at the time of sanction.

Disclosure and Communication to Borrowers

GFPL shall ensure transparent and timely disclosure of all applicable interest rates, fees, and charges to borrowers, in accordance with applicable guidelines issued by the RBI. The Company shall adopt the following practices:

The Company shall provide a KFS to borrowers, in a language understood by them, setting out the applicable interest rate, Annual Percentage Rate (APR), and all fixed and contingent charges.
At the time of sanction, the Company shall communicate the annualized interest rate, sanctioned loan amount, tenure, EMI amount, quantum and rationale for penal charges and the applicable interest rate, and other key terms, and shall document the same in the sanction letter, loan agreement, and KFS.
The Key Fact Statement (KFS) shall include a detailed computation sheet of the APR and the amortisation schedule for the entire loan tenor. The Company shall compute the APR by incorporating all charges levied by the Company.
Charges collected by GFPL from borrowers on behalf of third-party service providers, on an actual basis, such as insurance premiums, legal fees, valuation charges, or similar expenses, shall form part of the APR and shall be disclosed separately in the KFS. Where the Company collects such charges, it shall provide the borrower with receipts and supporting documents for each payment within a reasonable time.
The Company shall not levy any fee or charge that the KFS does not disclose at any stage during the loan tenure, unless it obtains the borrower’s explicit consent in advance.
The Company shall inform borrowers about the interest rate model policy and make the policy, interest rate ranges, approach to risk gradation, and Schedule of Charges (SOC) available on its website. The Company shall update the website promptly for any changes in benchmark rates or charges.
At sanction, the Company shall explain the potential impact of benchmark rate changes on EMI and/or loan tenor. The Company shall also provide prior notice, in a language understood by the borrower, of any prospective changes in rates or charges applicable to existing loans.
The Company shall disclose all loan terms and conditions, including applicable penal charges and the rationale for such charges, in the loan agreement, KFS, and customer communications. The Company shall notify borrowers whenever penal charges are applied, along with reasons for such charges.
The Company shall include disclosure of applicable penal charges in reminders issued for non-compliance with material loan terms.
The Company shall make account statements accessible to borrowers through appropriate channels such as email, SMS, or other permitted communication modes.
The Company shall follow the Fair Practices Code and all related regulatory requirements adopted by the Company from time to time.

The Company shall implement the above disclosures on a prospective basis and shall communicate any revisions to borrowers through appropriate channels, ensuring ongoing compliance with applicable regulatory directions.

Compliance with the Policy

The Board of Directors shall provide for periodical review of the compliance and functioning of this Policy at various levels of management. A consolidated report of such reviews shall be submitted to the Board on a quarterly/half-yearly/yearly basis.

Review Of the Policy

The Board of Directors shall review this Policy annually or on a need-basis i.e., in the event of change in regulatory framework or for business or operational need (whichever is earlier). Such updates / changes to the Policy will be communicated to the relevant staff /personnel (both in-house or outsourced) and relevant stakeholders across the Company.

Notwithstanding anything contained in this Policy, in case of any contradiction of the provision of this Policy with any existing laws, rules, regulations, guidelines, or modification thereof or enactment of a new applicable law, the provisions under such laws, rules, regulations, guidelines, or enactment shall prevail over this Policy.