Key Facts Statement (KFS) for Loans & Advances

RBI has standardised how lenders disclose the true cost of a loan. Before this, KFS rules were scattered across digital-lending, microfinance and 'display of information' circulars. Now a single rule covers all retail and MSME term loans — which means your LAP, home loan and personal loan books are all in scope.

For every prospective borrower, the lender must hand over a Key Facts Statement in RBI's standard format (Annex A), written in a language the borrower understands, and obtain the borrower's acknowledgement that they have understood it. The KFS carries a unique proposal number and is valid for at least three working days for loans of seven days or longer — during that window the lender is bound by the terms quoted.

The heart of the rule is the Annual Percentage Rate (APR). The KFS must show the APR plus the full amortisation schedule. APR has to include every charge the lender levies — including third-party costs like insurance and legal charges collected on an actual basis, disclosed separately. The hard stop for banks: any fee not listed in the KFS cannot be charged later without the borrower's explicit consent. The KFS must also appear as a summary box inside the loan agreement itself.

For a LAP desk, this changes the sanction pack. Processing fees, legal and valuation charges, insurance, and stamping all roll into one disclosed APR. Credit card receivables are the only carve-out. The instruction is issued under the Banking Regulation Act, RBI Act and National Housing Bank Act, so banks, co-operative banks, NBFCs and HFCs are all bound.