RBI makes Key Fact Statement a must for retail and MSME loans
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The RBI on Thursday announced that it is mandatory for regulated entities such as NBFCs to provide ‘Key Fact Statement’ (KFS) in a simple format to borrowers for all retail and MSME loans.
This would provide critical information about the terms of the loan agreement, including all-inclusive interest cost, which will greatly benefit the borrowers in making an informed decision, the RBI said.
The Reserve Bank has announced several measures in the recent past to foster greater transparency and disclosure by the regulated entities (REs) in pricing of loans and other charges levied on the customers. One such measure is the requirement for lenders to provide their borrowers a Key Fact Statement (KFS) containing the key information regarding a loan agreement, including all-in-cost of the loan, in simple and easy to understand format.
Currently KFS is specifically mandated in respect of loans by scheduled commercial banks to individual borrowers; digital lending by REs; and microfinance loans.
