RBI mandates lenders to furnish Key Fact Statement: What is KFS and how will it bring transparency? Experts explain
Also Read | Key Fact Statement (KFS) now mandatory: New RBI measure enhances transparency in lending for retail and MSME borrowers In its statement on Developmental and Regulatory Policies, the RBI emphasised that currently, the KFS is specifically mandated for loans by scheduled commercial banks to individual borrowers, digital lending by regulated entities, and microfinance loans. Also Read | RBI Policy: Governor Das unlikely to precede Fed in policy reversal; expect rate cut only in H2, say Economists "The Reserve Bank has announced several measures in the recent past to foster greater transparency and disclosure by the regulated entities (REs) in pricing of loans and other charges levied on the customers.
One such measure is the requirement for lenders to provide their borrowers a Key Fact Statement (KFS) containing the key information regarding a loan agreement, including all-in-cost of the loan, in simple and easy-to-understand format," the RBI statement said. Also Read | RBI MPC 2024: Global trade momentum weak, disruption in Red Sea impart uncertainty, says RBI Governor Shaktikanta Das A Key Fact Statement or KFS is a document that thoroughly lists lending terms.
It has key information regarding a loan agreement, including the all-in-cost of the loan, in a simple and easy-to-comprehend format. Also Read | Markets give a thumbs-down to RBI policy, crack 1% Manish Shah, MD and CEO of Godrej Capital, praised the move for enhancing awareness and empowering borrowers, lauding the RBI for promoting informed choices and trust in the lending process.
"This initiative not only fosters transparency for MSME borrowers but also equips them to make well-informed decisions. By making this practice mandatory, we commend the
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