How is the Recovery Fee Calculated?

Modified on Wed, 12 Aug at 11:31 AM

The Recovery Fee is calculated based on the recovered amount, the loan's Days Past Due (DPD), the third-party recovery cost, and the Loan Amount.

Let's understand this with an Example :

Assume an amount of INR 2800 is recovered from the borrower, The loan amount is 4000, DPD is 120 days.

A. A 25% Third-Party Recovery Expense is deducted from the amount recovered from the borrower to cover the cost incurred by the third-party recovery agency.

B. In addition, a fixed slab-based Recovery Fee is charged based on the loan's Days Past Due (DPD) and loan amount. This fee is also deducted from the recovered amount before the remaining balance is credited to the lender.

Loan Amount	4000
A. Recovered Amount	2800
B. (-) 25% Third-party Expense of Recovered Amount	700
C. (-) Recovery Fee (Slab)	1000
D. Total Recovery Fee (B+C)	1,700
Amount Receivable to Lender (A-D)	1,100

Important Points to Note :

Recovery fee is proportional to your contribution : The recovery fee deducted will be in proportion to your contribution to the loan. For example, if you funded 50% of the loan, you'll be charged 50% of the recovery fee.

Fee is capped at recovered amount: The total recovery fee (icncluding third-party charges) will never exceed the amount actually recovered. You will never owe more than wat was collected.