PRINCIPLES GUIDING INTEREST RATE DETERMINATION
Interest rate being charged is based on various factors like cost of funds, margin, risk premium, un-allocable expenses among other things. As far as risk premium is concerned, it will be based on variables like Profile, underlying security, tenure, other terms and conditions etc.
Asset Liability Committee (ALCO) has been authorised by Board for the purpose of laying out appropriate internal principles and procedures in determining interest rates and other charges. ALCO comprises of Head of the organization along with relevant head of the departments. ALCO has product pricing as one of the responsibilities among other things authorised by Board.
The Board of Directors of the Company or a Committee drawing power from the Board, while fixing interest rates shall be guided by this document on Interest Rate Determination. In addition to basic cost elements, the Board or the Committee shall be guided by the market conditions and various rules and regulations, if any, prescribed by the Reserve Bank of India or such other competent authority from time to time.
Interest charged for various products / Schemes shall have the following components:
- Base Rate
- Approach for Gradation of Risk/Risk Premium
- Penalty Charges
1 Base Rate
3. Penalty Charges
Interest Rate Policy