RBI gave instructions to banks and financial institutions, said to give details of all important facts related to loan
RBI said that this step has been taken to increase transparency and reduce variation in information on financial products offered by various regulated entities. KFS is a description of the main facts of the loan agreement so that the agreement can be understood in simple and easy language. It is provided to the loan takers in a standard form.
Retail customers and MSMEs taking loans starting on October 1 must receive all key facts statements (KFS), according to a directive issued by the RBI on Monday to all banks and financial institutions. This covers every detail, including interest charges and loan agreement regulations. Key disclosures are currently required for consumers taking out retail loans from microfinance firms, commercial banks, and digital lending entities (REs) regulated by the RBI.
RBI said that this step has been taken to increase transparency and reduce variation in information on financial products offered by various regulated entities. KFS is a description of the main facts of the loan agreement so that the agreement can be understood in simple and easy language. It is provided to the loan takers in a standard form.
RBI has said that all financial institutions will have to soon implement the necessary systems and guidelines regarding implementation to comply with these rules. The new rules will apply to all loans taken by new and existing customers after October 1.
RBI says that any fees charged in favour of third-party service providers should also be reported separately. These rules will not apply to credit cards.
