Policies
Kinara Capital is a pioneering Fintech NBFC, providing fast and flexible and collateral free loans to small business entrepreneurs, thus driving financial inclusion of the underserved MSME sector in India. Kinara Capital provides loans in the range of INR 1-40 lakhs for Working Capital and Asset Purchase needs. Kinara Capital is addressing the missing link between microfinance and commercial capital in the MSME sector. The funds for such loans are borrowed from banks and other financial institutions for on-lending to potential borrowers.
The Reserve Bank of India (RBI) had vide its Circular NBS.CC. PD. No.320/03.10.01/2012-13 dated February 18, 2013 and as amended from time to time. advised that Boards of Non-Banking Finance Companies (NBFCs) should lay out appropriate internal principles and procedures in determining interest rates, processing and other charges. Keeping in view the RBI's guidelines as cited above, and the good governance practices, KinaraCapital Private Limited (formerly known as Visage Holdings and Finance Private Limited). hereinafter referred to as “Kinara”, has adopted the following internal guidelines, policies, procedures and interest rate model for its lending business.
Kinara Capital borrows moneys from a multitude of financial institutions viz. banks, through issue of Non-Convertible Debentures, Commercial Paper, etc. While there are a number of factors evaluated by the lenders before arriving at the cost of funds that would be levied on the Company, the primary parameter that differentiates the cost between different forms of funding is the underlying tenure of the facility sanctioned, etc. Usually, longer tenure facilities come at a higher cost compared to the shorter tenure facilities.
The interest rate for each of our products are decided by the Credit Committee (CC) at the recommendation of the ALCO (Asset Liability Committee). The average yields and the rate of interest under each product are decided from time to time, giving due consideration to the following factors:
Kinara has adopted a discrete interest rate policy which means that the rate of interest for the same product and tenure availed during the same period by separate customers will not be standardized but could vary within a range, depending, amongst other things, the factors mentioned above.
The customers are categorized into a gradation of risk categories based on various data points collected during the loan process such as customer history, business history, credit history, sector, sub-sector business is operating in, business revenues, banking history, past loan history with Kinara, etc. Based on data collection, verification and calculations, our data science model determines the risk of each loan and categorizes this risk into different risk bands. A risk adjusted premium is applied to the base rate of a particular loan product to derive the final interest rate for a given loan. Also, Kinara does not plan to enter or deal with the High-Risk segments such as politically exposed person of Indian or Foreign Origin, those with dubious reputation as per public information available etc.
Interest Rates can range from 14% to 36 % per annum on a reducing balance basis for a loan. Identical products may attract different interest rates for different customers. Interest rates may vary depending upon a combination of factors including but not limited to credit and default risk, historical performance of similar clients, profile, repayment track record and credit history of the applicant, nature of the business, value of collateral security, tenor, etc.
Kinara charges processing fees ranging from 0 to 3% of the approved loan amount + GST @ 18%, depending on the product. This is deductible from the loan amount at the time of disbursement.
*MOTD – Memorandum of Deposit of Title Deeds.
Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | Column 6 | Column 7 | Column 8 | Column 9 | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Pre-payment or Foreclosure charges | Tenure | ||||||||||||||
Pre-payment or Foreclosure charges | Upto 12 months | Upto 18 months | Upto 24 months | Upto 30 months | Upto 36 months | Upto 48 months | Upto 52 months | ⮚ 52 months | |||||||
10% | 0-6m | 0-6m | 0-6m | 0-6m | 0-6m | 0-6m | 0-6m | 0-6m | |||||||
8% | NA | NA | 7-9m | 7-9m | 7-9m | 7-12m | 7-13m | 7-15m | |||||||
5% | 7-9m | 7-12m | 10-12m | 10-15m | 10-18m | 13-24m | 14-26m | 16-30m | |||||||
3% | NA | NA | 13-18m | 16-22m | 19-27m | 25-36m | 27-39m | 31-45m | |||||||
2% | 10-12m | 13-18m | 19-24m | 23-30m | 28-36m | 37-48m | 39-52m | >45m |
The rates of interest and charges shall be reviewed periodically and any revision in this policy shall be decided by the Credit Committee. The policy will be reviewed yearly or as required by the Board of Directors of the Company.