Background

The domain name www.indiumfinance.com (“website”) is owned by Indiumplus Financial Services Private Limited, (“Company”). The Company is a Non-Deposit taking Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI) and is inter alia engaged in the business of providing financial assistance to various business entities including small and medium enterprises in the form of facilitating access to various loan products from time to time.

The Reserve Bank of India (RBI) has issued guidelines on Fair Practices Code (FPC or Code) for NBFCs thereby setting standard for fair business and corporate practices while dealing with their customers .

Further to the RBI circular (RBI/2023-24/53 DoR.MCS.REC.28/01.01.001/2023-24) dated August 18, 2023 - Fair Lending Practice - Penal Charges in Loan Accounts, and Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023, dated October 19, 2023 (RBI/DoR/2023-24/106 DoR.FIN.REC.No.45/03.10.119/2023-24), the Company has laid out its policy for Penal Charges. This policy has been reviewed and approved by the board.

Policy Details

1. The Company may impose penalty for the non-compliance of material terms and conditions of loan contract by the borrower. The same shall be shall be treated as ‘‘penal charges’’. The charges in form of “penal interest” shall be discontinued w.e.f. April 01, 2024. In the case of existing loans, the switchover to the new penal charges regime shall be done before June 1, 2024.
2. There shall be no capitalisation of penal charges i.e., no further interest computed on such charges. However, this will not affect the normal procedures for compounding of interest in the loan account. Thus Interest may be charged on unpaid interest (including on unpaid EMI) at the contracted rate of interest till the date of remediation, and not at the penal rate of interest.
3. Any additional component to the rate of interest shall be disallowed.
4. The penal charges in case of loans sanctioned to ‘individual borrowers, for purposes other than business’, shall not be higher than the penal charges to nonindividual borrowers for similar noncompliance of material terms and conditions.
5. The details of Penal Charges (quantum / reasons) will be clearly disclosed to the borrowers in the Sanction Leaer /Loan Agreement and Key Facts Statement (KFS), as, in addition to being displayed on Company’s website.
6. Whenever reminders for non-compliance of material terms and conditions of loan are sent to borrowers, the penal charges shall be communicated by means of SMS/Email messages. Further, any instance of levy of penal charges and the reason therefor shall also be communicated.
7. For Invoice Finance, Personal Loan and Business Loan products, the following Penal Charges will be applicable:
   1. Penal Charges shall be levied to any loan account which has overdue interest and / or principal amounts. These will be levied at the rate of 2% per month (or 24% per annum) on overdue amounts.
   2. Within the same Product, the Company may charge different Penal Charges depending upon the sanctioned loan amount in line with the appropriate Board approved policy and adopt a suitable structure of penal charges that is ‘reasonable’ and ‘commensurate’ with the noncompliance of material terms and conditions of the loan contract.
8. As per Ministry of Finance circular number 245/02/2025-GST dated Jan 28, 2025, GST is not applicable on these penal charges.

Policy Review

This Policy will be reviewed by the Board on an annual basis unless there is any regulatory or business requirement to amend this Policy in the interim.