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Loans and Advances - India

 
 

Interest Rate Model

Applicable Regulations

Policy on rate of interest has been formulated to comply with the following regulations and guidance:

  • Circular number DNBS.PD/CC.No.95/03.05.002/2006-07 dated May 24, 2007, issued by RBI.
  • Notification number DNBS.204/CGM(ASR)-2009 dated January 2, 2009 issued by RBI.
  • Other applicable guidelines, notifications, circulars (if any) on rate of interest issued by RBI and/or any other regulatory authority from time to time.

Client Classification

This Policy applies to clients whose loans or advances are booked in Credit Suisse Finance (India) Private Limited.

CS Finance has adopted a risk-based approach for client classification for the purpose of determining applicable rate of interest, which differ for each client, primarily based on risk factors such as entity structure, industry, networth, leveraging, and nature/purpose of proposed loan/advance.

Classification for the purpose of determination of rate of interest can be summarised as follows:

  • Risk Category ‘A’ (Low Risk) - individuals, entities, companies (including associates / affiliates) are not regulated by the RBI, SEBI and/or any other governmental agency, but are having very high networth with low leveraging.
  • Risk Category ‘B’ (Medium Risk) - individuals, entities, companies (including associates / affiliates) are not regulated by the RBI, SEBI and/or any other governmental agency, but are having very high networth with medium leveraging.
  • Risk Category ‘C’ (High Risk) - individuals, entities, companies (including associates / affiliates) are not regulated by the RBI, SEBI and/or any other governmental agency, but are having medium networth or are highly leveraged.

Front Office person have responsibility to provide complete details of the client to the Credit Risk Management Department (“CRM”) for determining the category of such client. Decision of CRM relating to the classification of the client shall be final and conclusive.

Client classification can be upgraded or downgraded on a case-by-case basis. The Front Office person has to complete the Exceptional Approval Form and submit to the CRM for their review.

If client in any of the above class is having any record of financial defaults, then all accounts relating to such client shall be approved by a Front Office Managing Director, with justification for the same.

CRM approval is required for all new loan facilities and all restructured loan facilities.

Parameters for Determining Interest Rate

Indicative rate of interest applicable to each category of client is determined on the basis of factors such as, cost of funds, haircut margin, carrying cost, operating cost, cost of maintaining minimum reserve, cost of maintaining exposure limits, risk premium, etc.

For indicative rate of interest applicable to each category of client for loan denominated in Indian Rupees please click here.

Rate of interest in above link are indicative and the management of the Company reserve right to change the same from time to time based on the market conditions and internal credit policies.

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