RBI Mandates KFS for Loans: Banks Must Disclose All Charges, Huge Win for Borrowers!

• RBI mandates Key Fact Statement (KFS) for all retail and MSME borrowers to ensure transparency in loan costs.
• KFS aims to reduce information asymmetry by clearly detailing all charges, including the Annual Percentage Rate (APR).
• APR includes interest rate, processing fees, documentation charges, and insurance premiums, providing the true cost of a loan.
• Lenders cannot charge fees not mentioned in KFS without explicit customer consent, and KFS must be in a language the customer understands.
• KFS offers have a validity period (at least 3 working days for loans >= 7 days), allowing customers to compare and make informed decisions.

Why It Matters: RBI's KFS mandate ensures loan transparency, empowering borrowers with clear cost information and comparison tools.