Sid,
My bad, I did not understand your question previously. I think i understand it now.
Anyways, to answer your question - There is no blended rate in the UGRO example. Ugro charges the end customer the entire 14.5% (pays an interest expense of 10.5%) and therefore pockets the 4% spread. That’s how they get the 3,200 cr as well (4% of 80,000). They are not claiming any part of the banks interest income. The bank’s interest income is 8,400 cr (10.5% of 80,000 cr) shown as interest expense in the UGRO illustration (post above)
The screenshot you attached is from the RBI circular dated 2018.
To my understanding & I could be wrong, There is a new circular - RBI circular / 2020-21/63 FIDD.CO. Plan.BC.No.8/04.09.01/2020-21 dated 05.11.2020. In which there is no mention or requirement for a blended rate. It simply states, “The ultimate borrower will be charged whatever interest rate agreed by both lenders” Screenshot below. There is no mandate on a blended rate depending on % of loan contribution.
Even theoretically, the Blended rate idea does not make much sense to me.
Any bank lending to UGRO, will price risk differently when lending to UGRO vs lending to a Micro SME(end consumer that UGRO lends to). The idea that they should use the UGRO lending rate and blend that (in proportion of loan contribution) while lending to the end Micro SME customer doesn’t make much sense, as the end consumer is way more risky than UGRO is, and therefore needs to be priced accordingly.
Hope this helps
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