INTEREST RATE POLICY

INTEREST RATE POLICY

Policy Objective

The interest rates for the “Qualifying Assets” charged by Light Microfinance Pvt. Ltd. are based on the extant RBI guidelines as applicable to NBFC-MFIs.

PROCESS

The interest rate charged by Light to its borrowers is the lower of the following:

a)The cost of fund plus applicable margin; or (The Cost of Fund as calculated according to RBI & MFIN guidelines – Interest accrued on Qualifying Assets is divided by the fortnightly average of the outstanding of the assets, is compared with the Interest Cost Borne plus the amortization of Processing Fees & Stamp Duty paid as reduced by the accrued interest on Cash Collateral as divided by the fortnightly average of the debt outstanding and the same reduced by Cash Collateral.)

b)The average base rate of the five largest commercial banks by assets multiplied by 2.75. The average of the base rates of the five largest commercial banks as advised by the Reserve Bank on the last working day of the previous quarter, which determines the interest rates for the ensuing quarter.

All applications received post the applicability of the rate change (as per extant guidelines, typically the first day of the quarter) will attract the revised interest rate).

The revised interest rate becomes applicable from the first day of the quarter. The MIS is updated with the applicable interest rate within couple of hours from the announcement of the base rate by RBI. Basis the new applicable interest rate the revised repayment schedules are communicated to the all the branches.

The Revised Rates are displayed on the website and in the Offices of Light Microfinance within 7 days of the notification for such rate change.