The Reserve Bank of India (RBI) announced that starting from October 1, banks and NBFCs must share all details about loans, like interest and other costs, with customers for personal and small business loans.
They need to provide a ‘Key Fact Statement’ (KFS) which is a summary of loan terms in easy language.This is to make things clearer for borrowers and help them make better financial decisions.
Additionally, any extra fees, such as insurance or legal charges, must be included in the Annual Percentage Rate (APR) and disclosed separately.
Borrowers must agree to any new charges during the loan term, except for credit card transactions.Overall, these changes aim to simplify loan terms and empower borrowers with clear information for better decision-making.
These rules apply to loans from any institution regulated by RBI. The KFS will be given to borrowers in a standard format.The goal is to help borrowers understand better and make smarter financial decisions.
RBI wants financial institutions to follow these guidelines without exception for all new loans starting from October 1, 2024.
They also want any additional fees, like insurance or legal charges, to be included in the Annual Percentage Rate (APR) and disclosed separately.
If any new charges come up during the loan term, the borrower must agree to them first, except for credit card transactions.Overall, this is meant to make loans easier to understand and help borrowers make informed choices.
These rules apply to loans from any RBI-regulated institution, with the KFS given in a standard format. RBI expects all financial institutions to follow these guidelines for new loans starting October 1, 2024.
