1 Background

In accordance with RBI regulations with respect to digital lending, “Guidelines on Digital Lending” vide circular no. DOR.CRE.REC.66/21.07.001/2022-23 dated September 02, 2022 read with Master Direction – Reserve Bank of India (Non-Banking Financial Company– Scale Based Regulation) Directions, 2023 dated October 19, 2023 and amended from time to time (“Scale Based Regulations”) were prescribed for regulated entities to provide for a policy to be framed for providing the mechanism for calculation of interest rate for its borrowers and also ensuring transparency in methodology of calculation of interest rates.

2 Objective

In accordance with the RBI directions, Newtap Finance Private Limited (“Company”) is required to adopt an appropriate interest rate model taking into account relevant factors and to disclose the rate of interest, gradations of risk and rationale for charging different rates of interest

Keeping in view the RBI's guidelines as cited above, and the good governance practices being followed by the Company, the following internal guidelines, policies, procedures and interest rate model have been adopted by the Company.

The Company’s lending products will be priced in accordance with business objectives to sustain interest income and ensure adherence to business objectives.

With the help of this policy, the company shall determine the bates to be used for arriving at the final rate to be charged to the borrowers/ customers for various products financed by the company

The Company shall adopt all the best practices prescribed by RBI from time to time and shall make appropriate modifications, if required, in the Interest Rate Policy to comply with the standards so prescribed.

3 Products

The Company is offering the following products to the consumers

• - Personal loan
• - Short-term Personal Loan
• - Loan against securities/ mutual funds
• - Business Loan products

The above-mentioned products can be offered by the Company or through a Co-lending model with other Regulated Entities (“RE”) registered with the RBI and the pricing for each product may vary depending on the commercial arrangement with each Co-lender.

Depending on the business strategy and objectives, the Company can either add or substitute the current product offering considering the demand of the product and its financial and strategic viability

Interest rate calculations could vary depending on risk criteria for each of the products.

4 Interest rate calculation criteria (Approach for Gradation of Risk)

The company intends to follow a Risk based pricing and accordingly leverage the risk under-writing model to charge relevant interest rate from the customer across different programs. The decision to give a loan and the interest rate applicable to each loan account will be assessed on a case-to-case basis, based on multiple parameters such as the borrower profile, repayment capacity, borrower’s other financial commitments, past repayment track record if any, loan to income ratio and employment stability.

The definition of interest rates will be risk-based and based on consumer segmentation. In order to promote growth, improve customer satisfaction and align with risk interest rates will be kept competitive.

The rate of interest shall be defined in accordance with the following parameters

 - Average Cost of funds of the Company 

- Operational and Administrative Costs

 - Negative Carry 

- Tenor Premium 

- *Risk Premium depending on the following risk factors associated with the borrower like

1.  bureau score, 
2.  repayment history,
3.  past history of 30+ dpd/ 90+ dpd 
4. write-off/ suit filed, 
5.  active credit card/loans on bureau,
6.  FOIR, 
7.  employment type, business segment etc, as applicable.

*The above mentioned factors can change depending on risk appetite for each customer segment and also as per the credit risk associated with the said customers.

5 Interest rates

This policy provides details of the interest rate being charged by the Company which are mentioned in Annexure-A .

6 Charges

In accordance with the business model of the Company, certain charges are part of the loans sanctioned by the Company. Please find the details of all the charges of all the products of the Company as per Annexure-B .

7 Annual Percentage Rate(APR)

The Company shall intimate the borrower, the loan amount; annualized rate of interest along with the tenure and amount of monthly/quarterly installment. The other charges such as processing fees, penal charges on delayed payments and bounce charges, if any, among the rest, shall also be mentioned in the Loan Agreement and also displayed on the website.

 The company will ensure that it does not resort to predatory pricing for standard interest rate and charges as well as penal charges. The company will ensure that it transparently communicates its interest rate and other charges to customers and does not change it retrospectively.

8. Types of Penal Charges:

 Penal charges may be levied in specific instances of material non-compliance with the terms of the loan agreement. These charges are applied under the following categories:

• Delayed Payment Charges: 
  Imposed when a borrower fails to pay the installment or scheduled dues by the due date. This charge compensates for the delay but is not treated as additional interest
• EMI Bounce Charges: 
  Levied when an EMI payment fails due to insufficient funds or other reasons attributable to the borrower. It reflects the administrative cost of mandate failure and reprocessing.
• Covenant Breach Charges: 
  Applicable when the borrower violates key contractual obligations such as non-submission of required documents, unauthorised use of loan proceeds, or other material breaches. 
• Margin Shortfall Charges (for Loans Against Mutual Funds): 
  Imposed when the borrower fails to maintain the required margin or pledge coverage and does not respond to calls for top-up or additional security.
• Payment Default Charges in Short-Term Personal Loans: 
  For short-tenure personal loans, charge may be levied if the borrower fails to make payment on or before the due date. 

All penal charges shall be applied in a fair, consistent, and transparent manner and in line with applicable regulatory guidelines.

9. Exemptions and Waivers

 Penal charges shall not be levied under the following circumstances:

a) Technical Failures: 
No penal charges shall be applied in cases where the delay in repayment is caused by 5 technical issues attributable to Newtap or its authorised payment gateway partners. Such instances must be substantiated through system logs or payment failure records.

b) Grace Period: 
A one-time grace period of up to five (5) calendar days during the loan tenure may be granted to the customers at the discretion of the Company. If the repayment is made within this period, no penal charge shall be imposed for that specific instance of delay. This benefit shall not be available more than once per loan account.

c) Compassionate Grounds: 
In genuine and exceptional situations, penal charges may be waived on compassionate grounds at the discretion of the Company. These may include events such as the death of an immediate family member, hospitalisation of the borrower or a dependent due to a serious illness, or financial hardship arising from natural calamities or disasters. Such requests must be supported by valid documentation and will be considered on a case-by-case basis. Approval of such waivers shall be routed through the internal governance framework and must be documented and authorised by designated officials as per the Delegation of Authority (DoA) matrix. 

10. Rationale of Penal Charges:

• Behavioural Incentive: These charges serve as a deterrent against habitual delays and encourage financial discipline. 
• Cost Recovery: The charge partially recovers operational costs incurred due to follow-ups, collections, and administrative activities resulting from defaults.
• Fair Practice: Charge may be waived off in cases where the customer demonstrates intent to repay and adheres to revised payment commitments. This aligns with customer-centric practices and RBI’s stance that penal charges should be fair, non-discriminatory, and transparent. 
• Regulatory Alignment: As per RBI circular dated August 18, 2023 on “Fair Lending Practice – Penal Charges in Loan Accounts”, penal charges must be reasonable and not be used as a disguised form of interest rate. This proposed flat amount meets those conditions. 

11. Rationale for Liquidation Charges:

• Compensation for Loss of Opportunity/Cost: Forced liquidation or pre-closure under non-standard scenarios may result in unplanned reinvestment or administrative overhead. 
• Operational Cost: Covers costs associated with asset realization, coordination with partners, and internal settlement processes
• Uniformity and Predictability: Flat charge ensures consistency across accounts and aids in transparent disclosure during onboarding.

 12. Benchmarking and Reasonableness: 

• These charges are benchmarked against peer NBFCs operating in similar segments. 
• The charges are moderate, non-punitive in nature, and aim to balance operational sustainability and customer affordability.

13. Disclosures & Customer Communication

 All penal charges shall be:

• Clearly mentioned in the Key Fact Statement (KFS), loan agreement, and schedule of charges. 
• Pre-informed through digital notifications (SMS/app/email) at least 3 days before EMI due date. 
• Communicated to the borrower after being levied, along with reasons.

 14. Controls and Monitoring 

• Penal charges shall be monitored periodically to ensure fairness and effectiveness in promoting credit discipline.
• Internal audits and compliance teams shall review implementation and customer grievances related to charges. 
• Any changes to this policy shall be approved by the Risk Management Committee and reported to the Board.

15. Policy Review

 This policy will be reviewed at least annually or upon material regulatory updates, operational changes, or audit feedback.

 Annexure - A

  The Interest rates across different loan products will be as per the details mentioned below:

Note: 

•  The Company does not charge any interest on Short term personal loan till the customer converts the spends into EMI 
• An interest free period of up to 30 days may be offered on the Short Term Personal Loan product

Annexure-B 

 Schedule of Charges (Updated on 29.07.2025)

Note:

1. All the above mentioned charges are exclusive of GST. Further, LAS Penal and Liquidation Charges are inclusive of GST.
2.  Insurance Premium: For an additional fee, Newtap offers an optional accidental insurance cover on loans. The premium is calculated per lakh of the loan amount, based on the borrower’s age and loan tenure.