Lenders will have to provide key facts statement about loan agreement terms

Reserve Bank of India (RBI) stated in a latest update that all lenders will have to provide key facts statement (KFS) about the loan agreement terms, including all-inclusive interest cost to borrowers for retail and MSME loans, from October 1. This is being done in order to enhance transparency and reduce information asymmetry on financial products being offered by different regulated entities (REs), thereby empowering borrowers to make an informed financial decision. Currently, KFS is specifically mandated with respect to loans by commercial banks to individual borrowers, digital lending by RBI-regulated entities (REs) and microfinance loans. The harmonised instructions shall be applicable in cases of all retail and MSME term loan products extended by all regulated entities.

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