PREFACE

Zed Leafin Private Limited (hereinafter referred to as the "Company" or "Zed Finance") is a company incorporated under the provisions of the Companies Act, 2013 and has obtained in-principle approval from the Reserve Bank of India ("RBI") for registration as a Non-Banking Financial Company ("NBFC"). The Company shall conduct its business in accordance with the applicable provisions of the Companies Act, 2013, RBI directions, regulations, guidelines, circulars, notifications, and other applicable laws and regulatory requirements, as amended from time to time.

The Company has formulated this Interest Rate Policy ("Policy"), duly approved by the Board of Directors, to establish the broad principles, parameters, and procedures governing the determination of interest rates, risk premiums, and other applicable charges in respect of the loan products and facilities offered by the Company.

The Company is committed to conducting its business in a fair, transparent, ethical, and legally compliant manner. The Company shall ensure that its lending and related activities are undertaken in accordance with applicable RBI regulations and directions, corporate laws, and other applicable statutory and regulatory requirements.

In the event of any inconsistency between this Policy and any applicable law, regulation, rule, notification, circular, direction, or guideline issued by a competent regulatory or statutory authority, the applicable law or regulatory requirement shall prevail to the extent of such inconsistency.

Any matter requiring interpretation or clarification in relation to applicable regulatory requirements shall be referred to the Compliance Officer or such other officer as may be designated by the Company for obtaining appropriate guidance and ensuring compliance.

The Company primarily provides short-term digital loans to eligible retailers and consumers through its digital lending platform. Such lending may comprise loans for personal or retail-related requirements and shall be extended in accordance with the Company's approved credit and lending framework. The interest rates applicable to such loans shall be determined in accordance with the principles, methodology, and regulatory requirements set out in this Interest Rate Policy.

The Internal Rate of Return ("IRR") and applicable interest rate for a particular loan shall be determined on a case-to-case basis, taking into consideration the nature and characteristics of the product, cost of funds, operating costs, credit risk, borrower profile, tenor, repayment structure, collateral/security, market conditions, and other relevant factors.

In accordance with applicable RBI requirements and the Company's Fair Practice Code, this Policy sets out the Company's broad approach for determining interest rates and adopting a risk-based pricing framework.

OBJECTIVE OF THE POLICY

The primary objectives of this Policy are to:

• Establish a transparent and consistent framework for determining interest rates applicable to different loan products and borrowers.
• Ensure that interest rates are determined after considering relevant business, financial, operational, and credit-risk factors.
• Establish an appropriate risk-based pricing mechanism.
• Ensure that customers are adequately informed about the applicable interest rate and other charges.
• Promote fairness and transparency in the Company's lending practices.
• Ensure compliance with applicable RBI regulations and other statutory requirements.
• Provide appropriate governance and oversight over the determination and revision of interest rates.

The interest rate applicable to a particular borrower may vary depending upon the assessment of the relevant risk and commercial factors associated with the transaction.

DETERMINATION OF INTEREST RATE

The interest rate applicable to each loan account shall be determined on a case-specific basis, within the applicable interest rate range approved by the Company, after considering various relevant factors.

The following factors, inter alia, may be considered while determining the applicable interest rate:

Tenure of the Loan

The interest rate may vary depending upon the tenor of the loan. Generally, a longer loan tenor may involve a higher degree of exposure to interest rate, credit, liquidity, and repayment risks and may accordingly be considered while determining the applicable rate.

The applicable tenor and corresponding pricing shall be determined based on the nature of the product, borrower's repayment capacity, cash flows, and other relevant factors.

Repayment Tenure and Structure

The repayment period may vary depending upon the nature of the facility, purpose of the loan, cash flows of the borrower, repayment capacity, and other relevant factors. Depending upon the product, repayment tenure may generally range from short-term to medium-term periods and may extend up to the maximum tenure permitted under the Company's lending framework and applicable regulations.

The repayment structure, frequency of instalments, and other repayment terms may also be considered while determining the applicable interest rate.

Cost of Funds

The Company's external cost of funds shall be an important factor in determining the applicable lending rate. Such cost may include the cost incurred by the Company for raising or sourcing funds through various permitted sources.

The Company may also consider its internal cost of capital, including the expected return on equity and other applicable funding-related costs.

The interest rate shall be determined after taking into consideration reasonable assumptions relating to the cost of funds, liquidity requirements, operating expenses, credit risk, and other relevant costs.

Where applicable, the Company may offer loans at fixed or floating rates in accordance with the terms of the relevant product and applicable regulatory requirements.

Operating and Administrative Costs

The Company shall consider the costs associated with originating, processing, administering, servicing, monitoring, and collecting a loan while determining the applicable interest rate.

Factors that may be considered include:

• Complexity of the transaction;
• Size and nature of the loan;
• Operational and administrative requirements;
• Cost of customer acquisition and servicing;
• Capital requirements and applicable risk weight;
• Geographic location of the borrower;
• Technology and infrastructure costs; and
• Other transaction-specific costs.

Borrower Profile and Customer-Specific Factors

The final lending rate may take into consideration the overall profile and creditworthiness of the borrower.

Relevant factors may include:

• Financial profile of the borrower;
• Repayment capacity;
• Existing financial obligations;
• Credit history and repayment track record;
• Length and quality of relationship with the Company;
• Nature and stability of the borrower's business or income;
• Future business potential;
• Nature and value of security/collateral, where applicable;
• Market reputation;
• Information obtained through due diligence and credit assessment; and
• Applicable credit information reports.

The Company may obtain and evaluate information from customer-provided documents, internal records, market intelligence, field assessments, credit information reports, and other permissible sources.

Credit Risk

Credit risk shall be appropriately factored into the pricing of loans.

The credit risk premium applicable to a particular transaction shall depend upon the Company's assessment of the borrower's creditworthiness, probability of default, repayment capacity, historical performance, financial position, nature of the business, security available, and other relevant risk parameters.

Higher-risk exposures may attract an appropriately higher risk premium, subject to the Company's approved pricing framework and applicable regulatory requirements.

Structuring Premium

Where a loan transaction involves significant structuring requirements, additional complexities, customized repayment arrangements or other transaction-specific considerations, an appropriate structuring premium may be considered while determining the final lending rate.

Any such premium shall be determined in accordance with the Company's approved internal framework.

Margin

The final interest rate may include an appropriate margin for the Company after considering:

• Cost of funds;
• Operating and administrative expenses;
• Credit and other applicable risks;
• Capital costs;
• Liquidity considerations;
• Regulatory requirements; and
• A reasonable return commensurate with the nature and risk of the transaction.

The margin shall be determined in accordance with the pricing framework approved by the Company.

RISK-BASED PRICING FRAMEWORK

The Company shall follow a risk-based approach for determining the interest rate applicable to individual borrowers and loan facilities.

The risk premium applicable to a customer may be determined based on, inter alia, the following factors:

• Borrower's profile and market reputation, including financial strength and business standing.
• Nature and characteristics of the loan product, including the type of facility, purpose of financing, and inherent risks associated with the product.
• Repayment capacity, based on the borrower's income, cash flows, financial obligations, and other relevant financial indicators.
• Credit history and repayment track record, including information available from credit information companies and the Company's internal records.
• Relationship with the borrower, including the duration of the relationship, historical performance, and conduct of previous facilities.
• Nature and value of primary and secondary security/collateral, wherever applicable.
• Loan-to-value ratio, where applicable to the relevant product.
• Type of asset financed and end use of funds, including the risks associated with the underlying asset or business activity.
• Business and industry risk, including the level of volatility, concentration, default risk, and other risks associated with the relevant business segment.
• Refinancing and liquidity considerations, including availability of refinancing or other funding avenues.
• Regulatory requirements, wherever applicable.
• Market conditions and prevailing competitive pricing, to the extent relevant and consistent with the Company's risk appetite.
• Any other factor that the Company may consider relevant for assessing the overall risk associated with a particular borrower or transaction.

The Company shall ensure that risk-based pricing is applied in a fair, reasonable, and consistent manner and is supported by appropriate internal assessment and documentation.

COMMUNICATION OF INTEREST RATE AND OTHER CHARGES

The Company shall communicate the applicable terms and conditions to the borrower in accordance with applicable regulatory requirements and the Company's Fair Practice Code.

The Company shall, as applicable, communicate the following to the customer:

SANCTION AND INTEREST RATE

The sanctioned loan amount, applicable interest rate, annualised/monthly rate of interest, tenure, repayment schedule, and other material terms and conditions shall be communicated to the borrower through appropriate documentation.

PENAL CHARGES/DEFAULT CHARGES

Details of applicable penal charges or other charges arising from default or delayed repayment shall be clearly communicated to the borrower.

Such charges shall be levied and applied in accordance with the applicable loan agreement, Company's policy, and prevailing RBI requirements.

Where required under applicable regulations, the relevant provisions relating to penal charges shall be appropriately highlighted in the loan documentation.

All applicable fees, charges, and expenses payable by the borrower in connection with the loan shall be appropriately disclosed in the relevant loan documentation and/or other applicable customer communications.

CHANGES IN TERMS AND CONDITIONS

Where there is any change in material terms and conditions of the loan, including any change in the applicable interest rate or charges, the Company shall communicate the same to the borrower in accordance with the terms of the loan agreement and applicable regulatory requirements.

Where necessary, such changes may be documented through an addendum, supplementary agreement, revised term sheet, annexure, or other appropriate documentation.

The Company shall maintain appropriate records of such communication and, where required, obtain and preserve acknowledgement from the borrower.

PROSPECTIVE APPLICATION OF CHANGES

Any change in interest rates, fees, charges, or other applicable terms, except where otherwise permitted under the loan agreement or applicable regulatory framework, shall generally be applied prospectively.

The Company shall ensure that customers are appropriately informed of any such changes in accordance with applicable regulatory requirements.

PREPAYMENT / FORECLOSURE CHARGES

Prepayment, foreclosure, or other applicable charges, if any, shall be levied strictly in accordance with the terms of the loan agreement and the applicable regulatory framework.

The Company shall comply with all prevailing RBI directions and restrictions relating to prepayment or foreclosure charges, including any restrictions applicable to floating-rate loans or specified categories of borrowers.

Where applicable RBI regulations prohibit the levy of such charges, the Company shall not levy such charges.

GOVERNANCE AND APPROVAL

The interest rate framework, pricing methodology, and broad risk-pricing parameters shall be approved by the Board of Directors or by such authority as may be delegated by the Board in accordance with the Company's governance framework.

The Company shall establish appropriate internal controls to ensure that interest rates are determined within the approved framework.

Any deviation from the approved pricing framework shall require approval from the competent authority designated by the Company and shall be appropriately documented.

DISCLOSURE OF INTEREST RATE POLICY

The Company may also make available the broad interest rate structure, applicable charges, and other relevant pricing information through appropriate customer communication channels.

WEBSITE DISCLOSURE

The Company shall make appropriate disclosures relating to its Interest Rate Policy on its website to promote transparency and enable customers and other stakeholders to understand the broad principles governing the Company's pricing of loan products.

The information published on the website shall be reviewed periodically and updated whenever required.

RECORD KEEPING AND DOCUMENTATION

The Company shall maintain appropriate records and documentation relating to the determination and approval of interest rates, risk premiums, charges, and any material pricing-related decisions, in accordance with applicable laws, regulations, and the Company's internal record-retention requirements.

Such records shall be made available for internal review, audit, regulatory inspection, or other lawful purposes, as applicable.

REVIEW AND AMENDMENT OF THE POLICY

This Policy shall be reviewed periodically and whenever there are material changes in the Company's business model, lending products, pricing methodology, applicable laws, or RBI regulations/directions.

Any amendment, modification, or revision to this Policy shall be placed before the appropriate authority for approval in accordance with the Company's governance framework.

The Company shall ensure that the Policy remains aligned with prevailing regulatory requirements and industry practices.

In the event of any change in applicable law, RBI directions, regulations, guidelines, or other regulatory requirements that renders any provision of this Policy inconsistent or contrary thereto, the applicable regulatory requirement shall prevail to the extent of such inconsistency, and the Policy shall be updated accordingly.