Last updated: 01 April 2024
Approved by Board of Directors · Ashiana Fincap Private Limited
1. Background
In accordance with the RBI Circular RBI/2023-24/53 dated 18 August 2023 (effective 01 April 2024), Ashiana Fincap Private Limited has discontinued the practice of charging penal interest (i.e., adding penal rates to the regular interest rate). Instead, the Company levies reasonable penal charges as a penalty for non-compliance with material terms of the loan agreement.
2. Key Principles
- Penal charges are not in the nature of interest and will not be added to the principal outstanding.
- Penal charges will not be compounded.
- Penal charges are applied on the overdue principal amount for the overdue period only.
- All penal charges are disclosed upfront in the sanction letter, KFS, and loan agreement.
3. Applicable Penal Charges
| Trigger Event | Penal Charge |
|---|---|
| Non-payment / delay in EMI | 2% per annum on overdue EMI principal component for the overdue period |
| Bounced ECS / NACH / cheque | ₹500 per bounce + applicable bank charges |
| Non-submission of financial documents (as required in loan agreement) | ₹500 per instance after 30-day notice |
| Non-creation / maintenance of security (if applicable) | As specified in sanction letter (case-by-case) |
4. Communication
Penal charges will be communicated to the borrower via SMS, email, or written notice prior to levying, wherever operationally feasible.
5. Waiver
The Sanctioning Authority may waive penal charges in genuine hardship cases on written request, subject to Board-approved guidelines.