Policy ID: PCI/POL/21/2026-27 • Version 1.0 Owner: CFO / Operations • Approver: Board of Directors Sources: RBC • Review: Annual / regulatory change
Purpose and application
Penalties for material breach of loan terms; product-specific regulatory exemptions apply.
1. Charge design:- Penalties shall be penal charges, not an additional interest rate or penal interest. Do not capitalize penal charges or charge interest on them. Normal contractual interest may continue as lawfully permitted.
2. Reasonableness and basis:- Charges shall be reasonable and related to the material non-compliance. For repayment default, use the amount in default, not the entire outstanding loan. Avoid discriminatory charges for comparable breaches; non-business individuals shall not be charged more than non-individuals for similar breach.
3. Board schedule:- Board shall approve breach types, calculation bases, caps, frequency and waiver authority. Until an approved product schedule is published, no new penal charge shall be introduced. Sales or collectors cannot invent rates or impose cash fines.
4. Disclosure and servicing:- Disclose amount/reason in KFS where applicable, agreement and website rate/charge schedule. State applicable charges in repayment reminders and communicate every levy with its reason. Keep borrower consent and fee calculation evidence.
5. Controls and review:- Operations shall independently check automated levies and reverse excess/duplicate charges promptly. CFO shall report charges, waivers and complaints monthly; Board shall review reasonableness annually. Charge changes are prospective and cannot waive law.
Source codes are linked to the Reference Register. Read with the common implementation controls and relevant annexes. Applicable law and RBI Directions prevail.