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Vishal Khandelwal (Senior Executive) (25 Points)

24 April 2013

Can a NBFC(Non Deposit based) having asset side more then 100 crores,charge differential interest rate from its borrowers.
If they can, so is it possible that they can charge nil rate from one borrower & 13% from the other. Is there any RBI guidelines for it.

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Sonam Bidasaria (CA) (770 Points)
Replied 09 May 2013

NBFC having asset size of more than 100 crores (NBFC-ND-SI) are rquired to follow Prudential Norm Guidelines issued by RBI.

As per Para 7 of Prudential Norms,

(1) The Board of Directors of every non-banking financial company granting/intending to grant emand/call loans shall frame a policy for the company and implement the same.

(2) Such policy shall, inter alia, stipulate the following, -

(i) A cut off date within which the repayment of demand or call loan shall be demanded or called up;

(ii) The sanctioning authority shall, record specific reasons in writing at the time of sanctioning demand or call loan, if the cut off date for demanding or calling up such loan is stipulated beyond a period of one year from the date of sanction;

(iii) The rate of interest which shall be payable on such loans;

(iv) Interest on such loans, as stipulated shall be payable either at monthly or quarterly rests;

(v) The sanctioning authority shall, record specific reasons in writing at the time of sanctioning demand or call loan, if no interest is stipulated or a moratorium is granted for any period;

(vi) A cut off date, for review of performance of the loan, not exceeding six months commencing from the date of sanction;

(vii) Such demand or call loans shall not be renewed unless the periodical review has shown satisfactory compliance with the terms of sanction.

Hence, for ebery NBFC, it is very important to frame demand/ call loan policy after keeping two special points:

1. That the policy should specifically cover such give the cope of granting interest free loan in some specific cases (which generally found while giving loan to director, group/ sister companies)

2. That poliy should not contain any point on which RBI may have objection.

I am attaching herewith the prudential norm guidelines. You may refer that.

Attached File : 78771 1172202 master circular prudential norms.pdf downloaded: 428 times

CA Rajesh Pabari (Chartered Accountant) (1975 Points)
Replied 15 June 2014

There is no written guidelines for compulsorily charging interest, however, RBI during inspection can ask to provide genesis of the transactions and reasons for not charging interest.