Introduction & Our Commitment
Swagat Hire Purchase and Finance Company ("the Company") is required under RBI guidelines to adopt a transparent, Board-approved interest rate model and to disclose the annualised rate of interest, gradations of risk, and the rationale for charging different rates to different categories of borrowers.
This Interest Rate Policy is adopted pursuant to:
- RBI Circular DNBS/PD/CC No.95/03.05.002/2006-07 dated May 24, 2007
- RBI Circular DNBS(PD)C.C.No.133/03.10.001/2008-09 dated January 2, 2009
- RBI Circular on Fair Practices — Charging of Interest dated April 29, 2024
- RBI NBFC (Scale Based Regulation) Directions, 2023 — Chapter VII
Interest rates charged by the Company shall be reasonable and not usurious. The Company shall not engage in predatory lending practices. All rates are determined based on objective risk factors applied uniformly — not on caste, gender, religion, or any other discriminatory criterion.
How We Determine Your Interest Rate
Your interest rate is built from the following components. This building-block model ensures the rate is cost-reflective, risk-based, and transparent:
| Component | Description | Approx. Contribution |
|---|---|---|
| Cost of Funds (CoF) | Weighted average cost of all borrowings — bank loans, NCDs, debentures, etc. | Varies with market rates |
| Operating Cost Spread | Staff, administration, technology, and premises costs | 1% – 4% p.a. |
| Credit Risk Premium | Compensation for expected credit losses based on borrower risk profile | 1% – 10% p.a. |
| Profit Margin | Target return on equity capital above cost | 1% – 3% p.a. |
| Liquidity Premium | Spread for asset-liability mismatch on longer-tenor loans | 0% – 2% p.a. |
The Cost of Funds and each component are reviewed by the CEO at least quarterly. Changes to the rate model require Board approval.
Risk Gradation Framework
The Credit Risk Premium in your rate is determined based on your risk category. Borrowers are graded objectively as follows:
The risk category assigned to you will be recorded in your credit appraisal and will be communicated in your Sanction Letter along with the specific rate applicable.
Risk gradation is based solely on financial and creditworthiness factors applied uniformly. It does not take into account caste, religion, gender, race, or any other protected characteristic.
Product-wise Interest Rate Bands
The Board has approved the following interest rate bands. All rates are on a reducing balance basis (annualised). Your specific rate will be determined within these bands based on your risk grade and communicated in your KFS and Sanction Letter.
The rate bands above are Board-approved limits. Your individual rate will be disclosed in your Key Facts Statement (KFS) and Sanction Letter before you sign any agreement. No loan will be disbursed at a rate outside the applicable band without specific Board approval.
Method of Calculation
- All interest is calculated on the Reducing Balance (diminishing balance) method, so you pay interest only on the outstanding principal.
- The Annual Percentage Rate (APR) — covering all costs including processing fees — will be disclosed in your KFS.
- Interest is charged from the date of actual disbursement to your bank account, not from the date of sanction or documentation.
- Each EMI statement will show the split between principal and interest components separately.
- For floating rate loans, you will be presented with six options at each rate reset date: switch to fixed, increase/decrease EMI, extend/contract tenure, make partial/full prepayment, or accept loan elongation as the default option.
Penal Charges
Penal charges apply for non-compliance with material loan terms. Per RBI guidelines effective January 1, 2024:
- Penal charges are NOT interest and shall NOT be capitalised or compounded.
- Charges are reasonable, non-discriminatory, and disclosed in bold in your Loan Agreement and in your KFS.
- When levied, you will be informed in writing of the reason and amount.
| Event | Charge |
|---|---|
| Cheque / NACH / ECS bounce | ₹500 per instance (+ bank charges actuals) |
| EMI overdue 1–90 days | 2% p.a. on overdue amount (non-compounding) |
| Failure to create agreed security in time | ₹1,000 per month of delay |
| Foreclosure — floating rate, individual, non-business purpose | NIL |
| Foreclosure — fixed rate / non-individual borrowers | Up to 2% of principal prepaid |
| Delay in document release by Company (Company's fault) | ₹5,000 per day — payable to you |
Other Charges Schedule
All charges are disclosed upfront in your KFS and Loan Agreement. No charge not listed in your KFS will be levied at any stage during your loan tenure without your explicit consent.
Our Disclosure Commitments
- The applicable interest rate, APR, and all charges for your specific loan will be disclosed in your KFS, Sanction Letter, and Loan Agreement before disbursement.
- This Interest Rate Policy — including rate bands and the risk gradation framework — is published on this website and updated whenever rates are revised.
- Any change in your interest rate will be communicated in writing before it takes effect.
- This policy is reviewed and re-approved by the Board at least annually. The current version is effective from 3 Feb 2026.
Read our Fair Practices Code for your full rights as a borrower, including grievance redressal, recovery conduct standards, and document release obligations. For any complaints or queries, contact our Grievance Redressal Officer: Dr. Prateek Singh, CEO — grievance@swagat.mitrsewa.com
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