RBI mandates transparent loan disclosures
In an effort to enhance clarity for borrowers, the Reserve Bank of India (RBI) has instructed banks to provide a ‘Key Fact Statement’ (KFS) for all retail and Micro, Small & Medium Enterprises (MSME) loans.
This statement is designed to reveal the various fees and additional charges associated with the loans. These charges can include one-time fees as well as recurring ones that occur annually.
The goal is to give borrowers a comprehensive understanding of the actual annualized interest rate and the overall financial commitment tied to the loan. By extending this requirement to cover all retail and MSME loans, the RBI aims to empower customers with detailed information, enabling them to make well-informed decisions about their borrowing.
