RBI Guideline: RBI issued new guidelines regarding loan, now customers will get this important document..


The Reserve Bank of India (RBI) said that from October 1, banks and NBFCs (non-banking financial companies) will have to provide all information about the loan agreement, including interest and other costs, to the borrower for retail and MSME loans 'Key Fact Statement' (KFS) will have to be paid.


At present, it has been made mandatory to provide all information regarding loan agreements, particularly concerning individual borrowers granted by commercial banks, digital loans of units under the purview of RBI, and small-amount loans. RBI said in the statement that it has been decided to harmonize the instructions on KFS for loans.

The central bank said, “This has been done to increase transparency and remove the lack of information regarding the products of financial institutions coming under the purview of RBI. With this, the borrower will be able to make financial decisions thoughtfully.

This instruction will be applicable in cases of retail and MSME term loans given by all entities (REs) coming under the purview of RBI regulation. KFS is a description of the main facts of the loan agreement in simple language. It is provided to borrowers in a standardized format.

The central bank said, “Financial institutions will take necessary measures to implement the guidelines as soon as possible. The guidelines will be followed in letter and spirit without any exceptions in case all new retail and MSME term loans are sanctioned on or after October 1, 2024. This also includes new loans given to existing customers.


RBI said that amounts like insurance and legal fees collected from institutions taking loans by institutions under the purview of the central bank on behalf of third-party service providers on an actual basis will also be part of the annual percentage rate (APR). This should be disclosed separately. Wherever RE is involved in the recovery of such charges, receipts and related documents will be provided to the borrowers for each payment within a reasonable time. Further, any charges that are not mentioned in the KFS cannot be charged at any stage during the tenure of the loan without the express consent of the borrower. However, in the case of credit cards, the provisions regarding the amount received have been exempted.

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