Zerodha Capital Private Limited (the “Company”) is a Company limited by shares incorporated under the Companies Act 1956.
The Company is registered U/s 45-IA of the Reserve Bank of India Act, 1934 as an Investment and Credit Company categorized under Base Layer as per Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 and is engaged in extending loans in the nature of Loan against securities.
This policy is prepared in line with the requirements prescribed by Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 and various RBI notifications / directions [“RBI Regulations”] issued in this regard.
The Interest rate model is required to be made available on the website of Zerodha Capital Private Limited (hereafter referred to as ‘Company’) to enable the customers to understand the logic and methodology of the lending rates charged to them.
The primary objectives of the policy are:
Methodology of Arriving at Interest Rate for Loans and approach for gradation of Risk.
The Company has its own model for arriving at interest rates taking into consideration among other things weighted average cost of funds, un-allocable overheads and other administrative costs. The weighted average cost of funds is computed taking into account the cost of aggregate borrowings at the month end time from various sources such as banks, NBFCs, non-convertible debentures if any, commercial paper etc. The said rate is reviewed in the Board meeting.
The rate of interest for loans for various business segments and various schemes thereunder is arrived at through interest rate model, cost on account of risk and tenor premium for the concerned business segment, business specific operating cost and margin is added to arrive at the lending rate.
The final lending rate for various products offered by will be arrived at after taking into account market reputation, interest, credit and default risk in the related business segment, historical performance of similar homogeneous clients, profile of the borrower, tenure of relationship with the borrower, repayment track record of the borrower in case of existing customer, subventions available, deviations permitted, future potential, group strength, overall customer yield, nature and value of primary and collateral security, etc. Such information is gathered based on information provided by the borrower, credit reports, market intelligence and information gathered by field inspection of the borrower’s premises.
The rate of interest for the same product and tenor availed during the same period by different customers may not be standardized. It could vary for different customers depending upon consideration of any or combination of above factors. Further the interest rates could be offered on fixed or variable basis and charged on flat or reducing balance method and the interest range could vary between ten and thirty six percent.
The interest could be charged on monthly or quarterly rests for different products / segments.
Interest rates / interest type would be intimated to the customers at the time of sanction / availing of the loan (by means of the Key Fact Statement (KFS)) and EMI apportionment towards interest and principal dues would be made available to the customer upon demand. The interest shall be deemed payable immediately on the due date as communicated and no grace period for payment of interest is allowed.
Besides normal interest, the Company may levy penal charges for delay or default in making payments of any dues. These penal charges for different products or facilities would be decided by the respective business head and communicated upfront to the borrower through the sanction letter and KFS.
The Company has its own model for arriving at base rates taking into consideration, among other things, Company’s weighted average cost of funds, unallocable overheads and other administrative costs which is further adjusted for ALM mismatch. The weighted average cost of funds is computed taking into account the cost of the Company’s aggregate borrowings at the month end time from various sources such as consortium and other bank lines, debentures (if any) etc. The base rate however does not include expected return on assets as it varies amongst different line of the Company’s businesses.
The rate of interest for loans for various business segments and various schemes thereunder is arrived at through the Company’s base rate model, cost on account of risk and tenor premium for the concerned business segment, business specific operating cost and margin is added to arrive at the lending rate.
The rates of interest for the same product and tenor availed during the same period by different customers need not to be standardized. It could vary for different customers depending upon consideration of any or combination of above factors.
The interest rate to be charged to the borrower for the loans will be decided keeping in view the RBI’s guidelines relating to regulation of excessive interest charged by NBFCs.
The Rate of interest to be charged will be duly disclosed to the borrower/s in the confirmatory letter, to be disclosed in bold and at an annualized rate in the sanction letter/Key facts statement annexed to the Loan Agreement. Along with the Rate of Interest, an Annual Percentage Rate accounting for all the charges for the facility on annualized terms will be stated in the KFS.
The interest rates on each of the loan products would be decided by such a body as authorized by the Board of Directors or the Board of Directors themselves or the ALM committee members.
The rate of interest for the same product and tenor availed during the same period by different borrowers need not be uniform. It could vary for different products for the same or different borrower.
The interest rates could be offered on a fixed or variable basis.
The interest reset period would be decided by the Company from time to time.
Interest is to be calculated on the amount utilized by the borrower and not merely on the sanctioned limit. No interest is payable on credit balance in the borrower’s account.
The average yield on a credit product and minimum rate of interest under each product line would be decided from time to time by the relevant authority.
Rationale for charging different rate of interest to different categories of borrowers depending upon consideration of any or combination of a few or all factors listed above shall be documented and the same shall be disclosed to the borrowers or customer in the application form and communicated explicitly in the sanction letter.
The annualized rate of interest and approach for gradation of risks shall be intimated to the borrowers and would be displayed in the statement of accounts.
An interest entry is recorded in the ledger on the last day of the month, and clients are given 7 days into the following month to make the payment. If the payment is not made within this 7-day period, the account will be considered as overdue starting from the 8th day, until the interest is paid.
Important changes in the policy shall be published on the website (if possible) or published in the newspaper or communicated to the borrowers before implementing changes in rates.
Interest Rates would be intimated to the customers at the time of sanction/availing of the loan (by means of KFS) and the EMI apportionment towards interest and principal dues would be made available to the customers.
The interest shall be deemed payable immediately on debits. However, grace period may be allowed for payment on the discretion of the Company subject to type of loan and regulatory restrictions. The changes in rates would be prospective in effect and intimation of change and other charges would be communicated to customers in any mode deemed fit.
The final lending rate (whether fixed or pegged to a base rate) for various products offered by the Company will be arrived at after taking into account market reputation, interest, credit and default risk in the related business segment, historical performance of similar homogeneous clients, profile of the borrower, tenure of relationship with the borrower, repayment track record of the borrower in case of existing customer, subventions available, deviations permitted, future potential, group strength, overall customer yield, nature and value of primary and collateral security, etc. Such information is gathered based on information provided by the borrower, credit reports, market intelligence and information gathered by field inspection (if any) of the borrower’s premises.
Changes in the interest rates and charges would be prospective in effect and intimation of change of interest or other charges would be communicated to customers in a mode and the manner deemed fit. Besides interest, other financial charges like processing fees, origination fees, cheque bouncing charges, late payment charges, re-scheduling charges, pre-payment / foreclosure charges, part disbursement charges, cheque swap charges, security swap charges, charges for issue of statement account etc., would be levied by the Company on events as laid down in the agreement. Besides these charges, stamp duty, indirect taxes and other cess would be collected at applicable rates from time to time as communicated in the documentation provided at the time of disbursement of the loan. Any revision in these charges would have a prospective effect and will be communicated with the borrower.
While deciding the charges, the practices followed by the competitors in the market would also be taken into consideration. Claims for refund or waiver of charges / penal charges / additional charges would normally not be entertained by the Company and it is at the sole discretion of the Company to deal with such requests. Any revision in the Company’s interest rates applicable to business would be reviewed by the board of directors/ALM committee members.
Penalty, if charged, for non-compliance of material terms and conditions of loan contract by the borrower will be treated as ‘penal charges’ and will not be levied in the form of ‘penal interest’ that is added to the rate of interest charged on the advances. There will 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.
The company will not introduce any additional component to the rate of interest and ensure compliance to guidelines in both letter and spirit. Therefore, a fixed penal charges which shall be reasonable and commensurate with the non-compliance of material terms and conditions of loan contract (including the default in repayment of the loan). The penal charges for operational nature shall be consistent across clients and loan products unless otherwise specified. However, the Penal charges for default in repayment or breach of any other Material Conditions of the Lending Agreement shall be as determined by the board of directors, based on the below parameters:
Further, a matrix for Penal Charges shall be developed for different products.
The penal charges in case of loans sanctioned to ‘individual borrowers, for purposes other than business’, will not be higher than the penal charges applicable to non-individual borrowers for similar non-compliance of material terms and condition.
The quantum and corresponding reason for penal charges (i.e. Default, non-compliance with Terms of Agreement) will be clearly disclosed to the customers in the loan agreement and most important terms & conditions / Key Fact Statement (KFS) as applicable, in addition to being displayed on company’s website under FAQ’s.
Whenever reminders for non-compliance of material terms and conditions of loan are sent to borrowers, the applicable penal charges will be communicated. Further, any instance of levy of penal charges and the reason therefor will also be communicated in case of default actually committed by the borrower.
The Company will communicate the effective rate of interest to customers at the time of sanction /KFS/ availing of the loan through email, the web-based platform and any other acceptable mode of communication.
Changes in the rates and charges for existing customers would also be communicated to them through various modes of communication such as website updation, email, letters, SMS, etc.
Any exceptions to this policy shall only be with the prior approval of the Board of Directors of the Company.
This policy has been adopted vide resolution of the Assets Liability Committee of the Company dated 26th June 2025. This policy shall be applicable organization wide with immediate effect. This policy shall be reviewed by the ALM Committee at least on an Annual basis.