73050 22272
Dhanam LogoDHANAM
Home
Gold LoanMortgage LoanSME LoanSmall Business LoanHousing FinanceCorporate Business LoanMicro FinanceNCD
About UsVision & MissionOur DirectorsSenior LeadershipEmerging LeadersAdvisory CommitteeMilestones
Investors
Code of ConductFair Practice CodeGold Loan PolicyInterest Rate PolicyLoan Pricing PolicyPrivacy PolicyVigil MechanismTerms and Conditions
General QueriesBranch Locator
Policy banner

Loan Pricing Policy FY 2024-25

Introduction

Dhanam Investment and Finance Pvt. Ltd. (Dhanam) is an NBFC MFI incorporated in the year of 2016 by its promoters under the Companies Act 2013 and was registered with RBI in the year 2017. The interest rate of the loans charged by the NBFC-MFIs to its microfinance borrowers had been determined and regulated by the RBI based on the cap (i.e. Cost of Fund + 10% margin or Average base rate of top 5 commercial banks * 2.75 times whichever is low).

This was de-regulated through the revised regulatory guidelines for the microfinance industry issued by RBI i.e. Circular no RBI/DOR/2021-22/89 DoR. FIN.REC. 95/03.10.038/2021-22 dated 14th March 2022. Under the new guidelines, Dhanam shall put in place a board-approved well-documented interest rate model/approach for arriving at the all-inclusive interest rate.

Policy Coverage

The Policy covers the following:

  • Components of pricing applicable for all loans (Microfinance and Non-Microfinance)
  • Spread applicable for microfinance loans
  • Ceiling on the interest rate and all other charges applicable to microfinance loans
  • Delegation of authority for pricing approval

Components of Pricing for All Loans

Pricing Formula: Finance Cost/Cost of Funds + Operational Cost + Risk Premium + Expected Profit Margin

  • Finance Cost/Cost of Fund: Borrowing cost calculated through XIRR method including all costs & expenses related to debt arrangement
  • Operational Expenses: Costs related to end-to-end loan cycle including manpower, collections, operations, technology, and administration
  • Risk Premium: Covers credit risks, operational risks, market risks, and systemic risks based on client profile and external factors
  • Expected Profit Margin: Reasonable profit margin for steady growth and sustainable ROI while not burdening customers excessively
FAQs
Our loan pricing is based on a comprehensive formula that includes Finance Cost/Cost of Funds, Operational Cost, Risk Premium, and Expected Profit Margin, all approved by our Board of Directors.
Interest rates are determined based on your credit profile, loan type, tenure, risk assessment, collateral quality, and current market conditions.
Yes, we have different pricing structures for microfinance loans, secured loans, and unsecured loans based on the risk profile and operational costs associated with each product.
Interest rates are reviewed monthly or quarterly depending on market conditions, regulatory changes, and our cost of funds to ensure competitive and fair pricing.
Operational costs include manpower expenses, collection costs, technology expenses, depreciation on assets, management and administration costs, and compliance expenses.
The loan pricing policy is approved by our Board of Directors, with regular monitoring by the Risk Management Committee (RMC) to ensure compliance and effectiveness.