Policy on Interest Rate and Charges

The Reserve Bank of India ("RBI”) vide Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025 has stipulated at Chapter III - Responsible Lending Conduct for all applicable Non-Banking Financial Companies (“NBFCs”) and has directed all NBFCs to lay down appropriate internal policies and procedures in determining interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances.

The rate of interest and the approach for gradations of risk and rationale for charging different rate of interest to different categories of borrowers shall be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter. The rates of interest and the approach for gradation of risks shall also be made available on the website of the companies. The information published on the website or otherwise published shall be updated whenever there is a change in the rates of interest.

The objective of adopting and implementing this policy is to institute fair and transparent dealings in the lending business in accordance with the aforesaid regulatory requirements and the Fair Practices Code adopted by Chhotaria Securities Private Limited (hereinafter referred to as “NBFC” or the “Company”).

The said Interest Rate, Upfront Charges and Incidental Charges like Penal Charges, Late Payment Charges, EMI Bounce Charges etc. broadly outlines the Interest Rate Model, Applicable Incidental in case of delay in repayment of loan or non-compliance with terms of the loan agreement and the Company's approach of risk gradation in this regard.

This Policy also aligns with RBI instructions on Key Fact Statement (KFS), transparency in lending, and customer protection measures as applicable from time to time.

The main objectives of this Policy are to:

• Ensure that interest rates are determined in a manner as to ensure long term sustainability of business by taking into account the interests of all stakeholders;
• Develop and adopt a suitable model for calculation of interest rate;
• Enable fixation of interest rates which are reasonable: both actual and perceived;
• Ensure that computation of interest is accurate, fair and transparent in line with regulatory guidelines and market practices;
• Charge differential rates of interest linked to the risk factors as applicable;
• Decide on the principles, methodology and approach of charging spreads to arrive at final rates charged from customers;
• The Company shall not levy any charges that have not been disclosed in the Sanction Letter, Loan Agreement, Key Fact Statement or Schedule of interest rates Charges.

This policy is approved by the Board of Directors of the Company and the Company has adopted the Policy on Interest Rate and Penal Charges taking into account relevant factors such as cost of funds, margin and risk premium and determining the rate of interest to be charged for loans and advances. Any revision in the Policy shall be reviewed by the relevant internal units and approved by the Board of Directors.

The Policy shall be reviewed at least annually or earlier if required due to regulatory changes.

This Policy shall always be read in conjunction with extant RBI guidelines, directives, circulars and instructions.

As per extant regulations and in terms of this Policy, the following disclosures shall be made:

The Company lends money to its customers and has various products to cater to the needs of different categories of customers. The interest rate of each product and every customer is decided from time to time, giving due consideration to the following factors:

• Cost of Capital: Cost of equity share capital infused shall be taken into consideration.
• Weighted Average Cost of Borrowing: External borrowings, brokerage, consultancy fees, and processing fees impact interest rate pricing.
• Risk: Credit risk based on tenure, loan ticket size, geographical location, property condition, customer segment, income stability, past repayment track record, bureau scores, and verification results.
• Opex Cost: Operating overheads including employee expenses, technology expenses, compliance overheads, customer acquisition, and onboarding costs.
• Tenure & Liquidity Premium: Premium linked to market duration and liquidity conditions.
• Profit Margin: Fair margin added to arrive at the sustainable lending rate.

Key parameters impacting determination:

The rate of interest and/or charges for the same loan product and tenor may vary across customers based on a combination of these parameters.

Rate of Interest shall be offered based on the risk and cost parameters:

• Loans are repaid through Equal Periodical Installments (EPIs) or Bullet Repayment via electronic modes. Interest is computed from the date of disbursement.
• Currently, all loans offered by the Company are at Fixed Interest rates.
• Interest rates are explicitly intimated at the time of sanction via the Key Fact Statement (KFS) along with full principal and interest amortisation schedules.
• Interest is payable immediately on the due date; no grace period is allowed.
• Any changes in rates or charges are strictly prospective in nature.

Penalty, if charged, shall be for non-compliance of material terms and conditions of the loan agreements. It shall not be levied in the form of 'Penal Interest' added to the loan rate, nor shall there be any capitalisation of penal charges (no compounding on penal charges).

• Penal charges for individual borrowers for non-business purposes shall not exceed those for non-individual borrowers.
• Penal charges are levied strictly on the overdue amount as specified in Annexure I.
• All penal charges and reasons are disclosed upfront in the KFS and Loan Agreement and displayed on the website.

Besides interest, upfront and incidental charges (such as processing fees, EMI bouncing charges, payment gateway charges, and stamp duties) represent actual operational costs incurred.

• All fees are clearly stated in the Key Fact Statement (KFS) prior to loan execution.
• GST and applicable statutory taxes are payable at prevailing rates on all fees.
• No unannounced or undisclosed charges shall be levied on any customer.

If a borrower wishes to exit the loan after sanction, he/she can do so within 1 day of loan disbursement as the look-up period. The principal amount and proportionate charges must be repaid, and no prepayment penalty shall be charged during this period.

No claims for refund or waiver of charges/penal charges for documentation or portfolio monitoring shall normally be entertained, except at the sole discretion of Chhotaria Securities Private Limited upon formal review.

a. The Company communicates effective interest rates explicitly in the Sanction Letter and KFS. The policy is accessible on the official website.

b. Any prospective changes in rates or charges are communicated via email, SMS, or registered digital platforms. No mid-tenure rate revisions apply to existing fixed-rate contracts.

The Board of Directors is authorized to review and revise this Policy in accordance with market conditions and Reserve Bank of India regulatory directives.