FINZY GLOSSARY PAGE

A loan on the Finzy platform that has remained overdue for a continuous period of 24 months or more. Finzy flags such loans separately on the lender dashboard to present a more realistic picture of the lender's net principal outstanding. The collections team and external agencies continue recovery efforts on bad loans.

An individual or business that applies for a personal unsecured loan through the Finzy platform. Eligibility requires Indian nationality, age 18+, a take-home salary above ₹25,000 per month (or annual business income of at least ₹5 lakh), and successful KYC and credit assessment.

A credit score generated by TransUnion CIBIL, one of India's four licensed Credit Information Companies (CICs). It ranges from 300 to 900. Finzy uses credit bureau reports from Equifax, CRIF, and CIBIL – but unlike most banks, Finzy does not rely on credit score alone; its proprietary Finzy Credit Algorithm weighs multiple additional factors.

A loan that does not require the borrower to pledge any physical asset as security. All personal loans on Finzy are unsecured — no collateral is required. Instead, Finzy relies on credit assessment and legal documentation (loan agreement, PDCs, demand promissory note) as recourse in the event of default.

The probability that a borrower will fail to repay their loan as agreed, resulting in a financial loss for the lender. On Finzy, credit risk rests entirely with the lender, not with Finzy. The platform mitigates risk through rigorous credit assessment, Finzy Ratings, and mandatory diversification across a minimum of five loans.

A numerical indicator, typically ranging from 300 to 900, that reflects an individual's likelihood of repaying debt on time. It is computed by Credit Information Companies (CICs) such as CIBIL, Equifax, Experian, and CRIF High Mark based on historical repayment data. A score of 750 or above is generally considered strong.

Failure by a borrower to make a scheduled EMI payment on time. On Finzy, a missed payment triggers penal charges (₹15–₹250 per day depending on principal outstanding) plus a Finzy fee. Continued default can lead to credit bureau reporting, engagement of collection agencies, and legal proceedings.

A signed legal document in which a borrower unconditionally promises to repay a specific loan amount on demand. Finzy collects a DPN from every borrower before disbursing a loan, providing a legally enforceable instrument in the event of default.

The practice of spreading a lending portfolio across multiple borrower loans to reduce the impact of any single default.

The fixed amount a borrower pays every month to repay a loan. Each EMI consists of two components: the principal repayment and the interest charge. On Finzy, interest is calculated on a reducing balance basis — meaning interest is charged only on the outstanding principal, causing the interest portion to decrease and the principal portion to increase over time.

One of India's four RBI-registered Credit Information Companies (CICs). Finzy uses credit bureau reports from Equifax (along with CRIF and CIBIL) to review a borrower's full credit history as part of its credit assessment process.

An e-mandate set up on a lender's bank account that automatically transfers periodic repayments received from underlying borrowers back into the lender's Finzy lending account. eSIP is mandatory for finzyALPHA NEO and finzyALPHA MAX products, enabling the compounding of returns without manual intervention.

A dedicated bank account managed by a neutral third party that holds lender funds and collects borrower EMIs. Finzy never takes direct custody of these funds. The arrangement ensures that lender money is ring-fenced and only disbursed to verified borrowers or returned to registered bank accounts.

Finzy's proprietary, multi-parameter credit scoring model that evaluates borrowers across income details, employment stability, existing debt commitments, savings and spending patterns, past repayment track record, social media activity and database checks. The algorithm assigns a Finzy Rating (A1–C6) and determines the applicable interest rate.

A proprietary credit rating assigned to every Finzy borrower, ranging from A1 (highest creditworthiness, lowest risk) to C6 (highest risk). The rating drives the interest rate charged to the borrower and disclosed to potential lenders. A1 borrowers pay the lowest rates (starting at 10.99% p.a.); C-category borrowers pay up to 27.99% p.a.

finzyACE is a consent-based short-term lending opportunity on Finzy, India's RBI-registered NBFC-P2P platform — designed to deliver higher returns over a focused 4-month tenure. With an indicative IRR of up to 13% p.a., lenders receive regular cashflows credited directly to their bank account upon successful repayment from the underlying borrowers.

A structured, consent-based lending product on Finzy offering three maturity variants — A12 (12 months, up to 10% p.a.), A24 (24 months, up to 11% p.a.), and A36 (36 months, up to 12% p.a.). Lenders select loans after reviewing borrower details. Returns can be taken as monthly cashflows via finzySWP or compounded via finzyALPHA MAX. A 3% p.a. platform fee applies.

finzyALPHA LITE is a version of finzyALPHA which results from disabling or cancellation of the e-mandate. Thus, all the repayments from underlying loans are repaid back to the registered bank account and the principal outstanding amount decays much faster leading to a serious loss of interest income.

finzyALPHA MAX is a version of finzyALPHA that offers advantage of power of compounding. In finzyALPHA MAX you will accumulate interest earned and the same will be lent into new loans in your lending account based on your consent.

A version of finzyALPHA that provides lenders with steady monthly cash flows via the finzySWP feature. Requires an active eSIP mandate, and maturity proceeds are returned around the selected maturity date.

A feature in finzyALPHA NEO that provides lenders with a fixed monthly cash payout calculated at 1% of their total amount lent on the platform. The payout is credited between the 7th and 10th of each month. If finzySWP payouts exceed interest earned, the principal outstanding gradually decreases.

The complete early repayment of an outstanding loan before its scheduled tenure ends. On Finzy, borrowers can foreclose their loan at any time without incurring any prepayment penalty.

The annual percentage charged on the principal loan amount. On Finzy, interest rates for borrowers start at 10.99% p.a. and go up to 27.99% p.a., determined by the borrower's Finzy Rating. Interest is calculated on a reducing balance basis — so you pay less interest as the loan balance decreases.

A mandatory identity and address verification process required under RBI regulations before any individual can borrow or lend on Finzy. KYC documents include a PAN card and government-issued address proof (Aadhaar, Driving Licence, Passport, Voter ID, or utility bills). Finzy accepts only soft/digital copies to speed up processing.

An individual or company that registers on Finzy to provide funds to borrowers in exchange for interest. To be eligible, a lender must be an Indian resident taxpayer, at least 18 years old, with annual income above ₹3 lakh or net worth above ₹10 lakh. The RBI caps total P2P lending at ₹50 lakh across all platforms.

The net annualised return earned by a Finzy lender on their lending portfolio, calculated as the Net IRR after deducting Finzy's 2% fee on EMIs and 18% GST. Lender ROI varies by the Finzy Ratings of the loans in the portfolio and can be reduced by borrower prepayments or defaults.

The legally binding tripartite contract signed between the borrower, the lenders (as a group), and Finzy as the platform intermediary. It outlines the loan amount, interest rate, tenure, repayment schedule, and remedies on default. The agreement is executed either digitally or via a Finzy representative's doorstep visit.

An exclusive Finzy benefit for borrowers who have maintained an excellent repayment record. It allows them to take a second (or subsequent) loan on Finzy while their existing loan continues under its original terms. The combined outstanding amount across all Finzy loans cannot exceed ₹5 lakh (with a regulatory ceiling of ₹10 lakh).

An RBI-regulated electronic payment system that automates recurring debit instructions. On Finzy, borrowers sign a NACH mandate so their monthly EMI is automatically debited from their bank account every month, removing the need for manual transfers.

A Non-Banking Financial Company – Peer to Peer is a specific category of NBFC licensed by the Reserve Bank of India to operate an online marketplace that connects borrowers and lenders directly. Finzy operates as an NBFC-P2P under RBI Master Directions. Unlike banks, an NBFC-P2P does not lend its own money — it purely facilitates the connection.

A form of financing in which individuals lend money directly to other individuals (or small businesses) through an online platform, bypassing traditional banking intermediaries. The P2P platform assesses borrower creditworthiness, facilitates loan documentation, collects EMIs, and distributes repayments to lenders. In India, P2P platforms must be registered as NBFC-P2Ps with the RBI.

Additional charges levied on a borrower for each day an EMI remains overdue. On Finzy, penal charges range from ₹15 to ₹250 per day, scaled according to the outstanding principal balance. These are charged on top of the regular interest rate and are separate from Finzy's delayed payment fee. The combined total cannot exceed the loan outstanding amount.

An unsecured loan extended to an individual for any personal purpose — such as home renovation, medical expenses, education, wedding, travel, or debt consolidation — without requiring collateral. Finzy offers personal loans ranging from ₹5,000 to ₹10,00,000 for tenures of 6, 12, 24, or 36 months at rates starting from 10.99% p.a.

The partial or full repayment of a loan principal before its scheduled due date. Finzy levies zero prepayment penalties. Part prepayment must be in multiples of ₹1,000 with a minimum of ₹5,000.

A one-time fee charged by Finzy at the time of loan disbursement, calculated as a percentage of the disbursed amount. The fee ranges from 2% (for A1–A3 rated borrowers) to 5% (for C4–C6 rated borrowers). An additional 18% GST is levied on the processing fee. This fee is deducted upfront from the disbursed loan amount.

India's central bank and monetary authority, which regulates all licensed NBFC-P2P platforms including Finzy. Key RBI guidelines for P2P platforms include a maximum lending cap of ₹50 lakh per lender across all platforms, a maximum borrowing cap of ₹10 lakh, mandatory escrow arrangements, and prohibition of guaranteed returns.

An interest calculation method where the interest for each EMI period is computed on the remaining outstanding principal after the previous EMI was paid — not on the original loan amount. This means the interest component of each EMI decreases over the loan's life, making Finzy loans cheaper in total compared to flat-rate loans.

The agreed duration over which a loan must be repaid. Finzy offers personal loan tenures of 6, 12, 24, and 36 months. The 36-month tenure is the default, as it results in the lowest monthly EMI. The available tenure for each borrower is subject to their Finzy Rating. Borrowers can prepay early without penalty regardless of the original tenure.

A loan that is issued solely on the basis of the borrower's creditworthiness, without requiring any physical collateral or guarantor. All Finzy personal loans are unsecured. In the event of sustained non-payment, lenders rely on legal remedies (DPN and court proceedings) rather than seizing an asset.