Tips to Configure: Lenders

partner_lender_id

The unique ID assigned to a specific lender - This makes clear which of your lending partners has funded a particular loan account, therefore allowing you to track repayments and profit due (based on the hurdle rate and interest type specified by the lender)

Interest and Repayment

lender_interest_rate

This is your lending partners Hurdle Rate - The rate of interest that your lending partner demands to earn on every loan it funds. This is required to reconcile the lending partners repayment schedule and calculate your revenue as payments come in.

lender_interest_type

The method used to calculate the interest amount charged on a loan. The interest type can be either Flat, or Reducing balance.

It is important to note that:

• If the interest rate demanded by a lender is 10%

• And the principal amount of the loan is INR 10,000 for a 1 year tenure

• The actual amount of interest charged would be different based on whether the flat or reducing balance method is used.

• Interest amount charged (flat method = INR 1,000) (reducing balance = INR 587)

cycle_interval

This lays out the interval for the billing cycle/repayment schedule between you and your lending partner. The most common interval is monthly, but it could also be yearly, weekly, or daily

FLDG (First Loan Default Guarantee)

fldg_rate

FLDG is a method used by licensed lenders to minimise the level of risk they face when partnering with fin-techs. The fin-tech must deposit a certain amount (dependant on the FLDG rate offered) with the lending partner, if any of the borrowers default on a loan, this amount is deducted from the fin-techs deposit.

An Example:

• A fin-tech partners with a lending institution to offer salary backed advances and would like the ability to disburse up to INR 1 Cr.

• The lending partner says they can offer this fin-tech a 20% FLDG rate

• This means in order to have the ability to disburse INR 1 Cr., the fin-tech must deposit INR 20 Lakh (20% of 1 Cr.) with the lending partner

• Any defaults will first be deducted from this INR 20 Lakh deposit.

reserve_balance

The reserve balance refers to the current value of amount you have deposited with the lending partner. As mentioned above any borrower defaulting is deducted from your deposit, and proportionately reduces the amount you are able to disburse.

An Example:

• You have deposited INR 20 Lakhs with your lending partner at an FLDG rate of 20%

• This allows you to disburse up to INR 1 Cr.

• You suffer INR 5 Lakh worth of defaults

• This reduces your deposit to INR 15 Lakh (reserve balance), and you can now disburse only INR 75 lakh till you top up your reserve balance

Name	M/O (Mandatory/Optional)	Description	Example
partner_lender_id	O	Your unique Lender ID	1234
lender_name	M	Lender	KUDOS FINANCE
lender_interest_rate	M	Hurdle rate of Lending Partner	12
lender_interest_type	M	FLAT or REDUCING	REDUCING
cycle_interval	M	WEEKLY or MONTHLY	MONTHLY
reserve_balance	O	FLDG Reserve Balance	10,00,000
fldg_rate	O	Total amount your lender can disburse on your behalf	1,00,00,000