Process/System to be followed for credit sanction:

A field-level credit check is done and for selected customers as per KYC norms files are sourced and sent to back office team for data entry and data verification. The data entered file will get moved to field verification. Once field verification is completed file is moved to CCA/GRT. With the information obtained during field verification and credit bureau analysis, for each customer score engine gets generated with the help of a search engine. If the client scores more than 65% then the customer is eligible for a loan, if the customer is rejected once the score obtained is less than that. After that file gets moved to the GRT stage, once BM gives a rating to the group and if exceeds 12 out of 18 then only the group is eligible for the loan, or else the group is moved again back to training.

JLG Income Generation Loans
Purpose
The Income Generating Loan is used for a variety of activities that generate income for their families, which enhances lifestyle of the clients.
This helps them clients to expand their current business or to start a new business.
INCOME GENERATION LOANS
Type of loan	Product A	Product B	Product C	Product D	Product E	Product F	Product G	Product H
Eligible Criteria	Customer availing Loan for the first time in the newly started branches.	Customer who repays the loan on-time and with long term relationship.	Customer who repays the loan on- time and with long term relationship. Also for fresh customers in the vintage branches.	Customer who repays the loan on- time and with long term relationship.	Customer who repays the loan on- time and with long term relationship.	Customer who repays the loan on- time and with long term relationship.	Customer who repays the loan on- time and with long term relationship.	Customer who repays the loan on- time and with long term relationship.
Loan term	18/24 months	24 months	24 months	24 months	24 months	24 months	24 months	24 months
Repayment Frequency	Weekly, Fortnightly and Monthly	Weekly, Fortnightly and Monthly	Weekly, Fortnightly and Monthly	Weekly, Fortnightly and Monthly	Weekly, Fortnightly and Monthly	Weekly, Fortnightly and Monthly	Weekly, Fortnightly and Monthly	Weekly, Fortnightly and Monthly
Loan size (Amount in Rs.)	Rs. 30,000	Rs. 35,000	Rs. 40,000	Rs. 45,000	Rs. 50,000	Rs. 60,000	Rs. 70,000	Rs. 75,000
Customer Insurance	Rs. 310	Rs. 362	Rs. 413	Rs. 465	Rs. 516	Rs. 620	Rs. 723	Rs. 775
Guarantor insurance	Rs. 310	Rs. 362	Rs. 413	Rs. 465	Rs. 516	Rs. 620	Rs. 723	Rs. 775
Processing fees	Rs. 600	Rs. 700	Rs. 800	Rs. 900	Rs. 1000	Rs. 1200	Rs. 1400	Rs. 1500
Service tax on processing fee	Rs. 108	Rs. 126	Rs. 144	Rs. 162	Rs. 180	Rs. 216	Rs. 252	Rs. 270
Interest rate	28.00%

Pricing Process

Loan pricing is the process of determining the interest rate for granting a loan. The interest rate is calculated based on the following factors:

Interest Rate:

UFin decides the interest rate based on the cost of funds, operational expenditure, credit/business risks, and desired ROA. With pricing deregulation, UFin adopts a differential approach to pricing (Prime lending rate being the rate at which high creditworthy borrowers can borrow) based on the customer segment (such as the nature of employment, income segment, age, location, etc.) and the customer's profile (including employment, income, age, location, credit history, and vintage with the lender). Additionally, prevailing market rates are factored in to remain competitive.

Prime Lending Rate:

UFin considers the following cost indicators to arrive at the reference lending rate:

1. Cost of Funds

A. Borrowing: UFin borrows funds through various forms (term borrowing, NCDs, subordinated debt) and considers the weighted average cost of borrowing, including the processing fee paid on the borrowing.

B. Equity: UFin allocates equity to run the business and factors in the cost of such equity. The cost of equity can be calculated using the CAPM* or the return agreed upon at the time of the equity raise. CAPM can be used in equity deals as well. The relative weight of borrowings and equity in funded liabilities is considered in the calculation..

C. Fundraising Costs: These include costs related to fundraising such as brokerage/advisory/market intermediation, rating, hedging, legal services, commissions, and exchange listing..

2. Operational/Opex/Overhead Costs: These include costs related to operations, employees, physical infrastructure (fixed and variable costs), sales and marketing, technology, among other things.

3. Loan Loss Reserve: The average write-off percentage of the last 3 to 5 years will be considered.

4. Profit Margin: The profit margin will be decided based on the growth rate and the market scenario.

5. Risk Premium: The risk premium is calculated based on the past portfolio quality.

The rate covering the following aspects:

Interest Rate	Finance Cost+Operational Expense+Loan Loss Reserve+Risk Premium+ Expected Profit Margin	As per Calculation	Proposed Range Minimum	Proposed Range Maximum
Interest Rate
	COF	18.40%	17.00%	18.00%
	Operational Exp	8.39%	8.00%	8.50%
	Loan Loss Reserve	0.66%	0.00%	0.50%
	Profit Margin	1.00%	0.75%	0.50%
	Risk Premium	0.50%	0.25%	0.50%
	Total	28.95%	26.00%	28.00%

A. For first-cycle customers, the ROI is 28%.

B. For second-cycle customers:

* Without any single delay in repayment, the ROI is 27%.

* With any single delay in repayment, the ROI is 28%

C. For third-cycle customers:

* Without any delay in repayment, the ROI is 26%.

* With a delay in history, the ROI is 28%.

Fee and charges:

Late/delayed payment:No penalty is being levied on delayed payments.

Pre-closure Charges:The company is not levying any prepayment penalty or pre-closure charges to its customers, While customers preclosing the account.

Processing Fee:

UFIN is availing term loan facilities from various lenders including NBFCs, and financial institutions for onward lending to microfinance customers. On average, UFIN is being charged with processing \ fees ranging between 1% to 1.50% for the loans availed.On the disbursements front, UFIN for disbursing a loan to a customer has operating charges (Operating charges include Sourcing cost, Credit report cost, Loan Processing Cost, \and Documentation Cost) of about 1%. Accordingly, 2% of the loan amount as a processing fee is to be collected from the customers by .

Income and expenses assessment of household:

Income assessment of house hold plays a vital role in onboarding customers and ensuring the repayment is made proper throughout the tenure. Customer income and expenses has to be captured in UFin Income assessment sheet which has various sources of income of household and the expenses made by the house hold. For each customer this has be captured and when customer found to be satisfactory then customer has to be sourced.

Assessment of Income expenses of house hold:

Once the income expenses of the house hold are obtained from the customers FOIR (Fixed Obligation Income Ratio) of the customers house hold has to be calculated. \ If the monthly Income to EMI (Current EMI + UFin loan EMI) ratio should be less than or equal to 50% and the monthly Income to expenses should less than or equal to 50%. This are the eligible loan customers. If any of the customers are not meeting this FOIR 50% then they are not eligible for availing loan from Ufin.

Additional loan Product:

To provide additional working capital to our customers and as part of customer retention it is proposed to provide additional / top up loan to existing customers. This provides customers to continue with UFIN for long time and to treat UFIN as one stop shop for all their financial needs.

Eligibility condition:

1.Customer should be existing customer of UFIN.

2.Half of the group loan tenure has to be completed.

3.Customer with on date- repayment is only eligible.

4.Customers having OD is not eligible for the loan.

Loan product details:

Additional loan
Purpose
To provide additional working capital to our customers and as part of customer retention it is proposed to provide additional / top up loan to UFIN existing customers..
Type of loan	Rural	Urban
Eligible Criteria	Customer who repays the loan on- time without any OD and completed half of group loan tenure	Customer who repays the loan on- time without any OD and completed half of group loan tenure
Loan term	6 months-12 months	6 months-12 months
Repayment Frequency	Weekly, Fortnightly and Monthly	Weekly, Fortnightly and Monthly
Loan size (Amount in Rs.)	Rs. 5,000-Rs. 10000	Rs. 6,000-Rs. 10000
Customer Insurance	Varies as per loan amount	Varies as per loan amount
Guarantor insurance	NA	NA
Processing fees	2 % of loan amount	2 % of loan amount
Service tax on processing fee	18 % on Processing fee	18 % on Processing fee
Interest rate	28.00%

Sanitation Loan

Purpose

The loan amount is to be utilized only for toilet construction / improvement.

(Construction of toilet, washroom and toilet combined, improving or repairing toilet or any water related construction, for the toilet like building water tank for home or water supply connection).

Type of loan	Toilet Construction	Toilet Renovation	Over Head Tank Installation
Eligible Criteria	UFIN existing group / fresh group UFIN existing clients / fresh clients	UFIN existing group / fresh group UFIN existing clients / fresh clients e	UFIN existing group / fresh group UFIN existing clients / fresh clients
Loan size (Amount in Rs.)	Rs. 50,000 to Rs. 1, 00,000.	Rs. 50,000	Rs. 30,000
Processing fees	2% of loan amount
Service tax on processing fee	18 % of processing fee
Loan term	24 Months	24 months	15 / 18/24 months
Repayment Frequency	Monthly	Monthly	Monthly

Note: Sanitation loan to be provided subject to verification of own house proof in the name of customer or guarantor or In-laws name.

Customer Awareness

Special Mention Accounts (SMA):

SMA Classification: Categories of loans that are overdue but not yet classified as NPAs.

SMA-0: Principal or interest payment overdue for 1-30 days.

SMA-1: Principal or interest payment overdue for 31-60 days.

SMA-2: Principal or interest payment overdue for 61-90 days.

Non-Performing Assets (NPA):

NPA Classification: Loans that are overdue for more than 90 days.

Substandard Assets: Overdue for 90 days to less than 12 months.

Doubtful Assets: Remain in the substandard category for 12 months.

Loss Assets: Considered uncollectible and of little value.

Upgradation: Process of reclassifying an asset from NPA to a performing asset after due payments are made.