Background
The Reserve Bank of India (“RBI”) pursuant to its circulars number DNBS.PD/CC.No.95/03.05.002/2006-07 dated 24 May 2007 and DNBS. 204/CGM(ASR)-2009 dated 2 January 2009, has advised all Non-Banking Financial Companies (“NBFC”) to comply with certain procedures with respect to the setting of interest rates for loans.
Keeping in view the above guidelines, the Board of Directors (“Board”)of Toyota Financial Services India Limited (“the Company”) has adopted Interest Rate Policy which outlays the governance mechanism and key consideration points to be followed in determining interest rate and other charges and also communication and disclosure of these to its clients.
Governance Mechanism for Interest Rate
The Company decides on the interest rates for each loan product from time to time, with considering discussion and advice by Pricing Committee which is constituted by senior management nominated by MD & CEO.
The Company shall disclose the interest rate applicable to a loan transaction in the loan documentation and the customer is not compelled to sign the loan documents unless the interest rate is acceptable to the customer.
Key Consideration Points
- Interest rates would be based on the cost of borrowed funds, matching tenor cost, market liquidity, refinance avenues, offerings by competition, cost of disbursements, cost of capital required, subventions and subsidies available, RBI policies on credit flow, industry trends, etc.
- Interest rates would also be based on the customer specific risk factors such as customer segment, job and education profile, income and assets, past repayment track record, tenure of customer relationship, external credit rating, nature and value of primary and collateral securities, guarantee, ancillary business relationship and opportunities, etc.
- The Company shall adopt discrete interest rate method, whereby the rate of interest may vary by customers depending on the factors listed above, even in case of same product with same tenor availed during the same period. The present rate of interest charged to our customers is upto 21% per annum.
- The Company can offer the rate of interest on fixed or floating basis. Floating rate can be linked to internal benchmark rate with predefined reset cycle agreed with the customer at the time of entering the contract.
- The Company may, besides normal interest, levy penal interest for any delay or default in making payments of any dues, additional interest, processing fee and other fees and charges as prescribed in loan agreement.
- The company would also charge applicable taxes (like service tax, GST etc.) as applicable from time to time.
- Interest rate, additional interest, penal interest, any fees, any charges for relevant products or facilities would be intimated to the customers through the sanction letter and/or loan agreements. The EMI apportionment towards interest and principal dues also would be made available to the customer.
- Any change in the interest rates ,EMI or loan tenure linked to interest rate ,or any other charges during the lifetime of loans or facilities would be communicated to customers in a mode and manner deemed fit. Acceptance from customer would be taken before the implementation of the same, except for regular rate reset of floating rate loans.