RBI requires banks, NBFCs and other regulated lenders to give borrowers a Key Fact Statement before signing any retail or MSME term loan. The KFS, in a standard format and a language the borrower understands, must show the all-inclusive annual percentage rate (APR), every fee and charge, the repayment schedule and grievance contacts. Charges not disclosed in the KFS cannot be levied without the borrower’s explicit consent.
RBI circular on Key Facts Statement for Loans & Advances
Dated 15 April 2024 (effective 1 October 2024)Mandatory KFS with APR and standard format for all retail and MSME term loans.
RBI Guidelines on Digital Lending, 2022 (and later directions)
KFS and cooling-off periodKFS, cooling-off/look-up period and disclosure duties for digital loans.
Reserve Bank – Integrated Ombudsman Scheme, 2021
Grievance redressEscalation route for borrowers if the lender does not resolve a complaint.
RBI’s circular of 15 April 2024 harmonised earlier KFS rules (which applied to digital loans, microfinance and some bank retail loans) and extended them to all retail and MSME term loans by all regulated entities, effective for loans sanctioned from 1 October 2024. Credit-card receivables are outside this framework because they are covered by separate card directions.
The KFS must follow RBI’s standard format and set out the loan amount, tenor, interest rate type, all fees and charges (including third-party charges collected by the lender), the annual percentage rate computed as an all-inclusive cost, an amortisation schedule, details of any recovery agents, the grievance-redressal officer and, for digital loans, the cooling-off or look-up period. It must be in a language the borrower understands.
The KFS carries a unique proposal number and must remain valid for a set period — at least three working days for loans with a tenor of seven days or more, and one working day for shorter loans — during which the borrower can accept, and the lender is bound by, the terms. The borrower’s acknowledgement of having understood the KFS is recorded, and the KFS summary is also included in the loan agreement.
A lender cannot charge any fee or charge that was not mentioned in the KFS without the borrower’s explicit consent. Non-compliance is a regulatory breach that RBI can act on, and a borrower can complain to the lender and then under the Reserve Bank – Integrated Ombudsman Scheme, 2021. Lenders typically build the KFS into their loan-origination and e-sign workflows so it is generated and acknowledged before execution.
Yes. Since 1 October 2024, a KFS is mandatory for all retail term loans, including personal, vehicle and home loans, from banks, NBFCs and other RBI-regulated lenders.
The annual percentage rate is the annual cost of credit to the borrower, including interest and all other charges associated with the loan, so borrowers can compare offers.
Not without the borrower’s explicit consent. Fees and charges not disclosed in the KFS cannot otherwise be charged at any stage of the loan.
Yes. The 2024 circular covers MSME term loans as well as retail term loans.
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