Before accepting a retail or small-business term loan, borrowers can use the Key Facts Statement (KFS) to review the main cost and repayment information in a standard format. The Reserve Bank of India requires regulated lenders to provide a KFS for covered loan products.
What the KFS helps you check
Read the loan amount, tenure, instalment amount and repayment frequency together. The statement should also show the Annual Percentage Rate (APR), which reflects the annualised cost of credit and applicable charges included under the rules. Compare these figures with the sanction letter and draft agreement, and ask the lender to explain any difference before signing.
Look beyond the interest rate
A quoted interest rate alone may not show the full borrowing cost. Review processing or other charges listed in the KFS, when they apply, and check whether any third-party charges are included or separately disclosed. Confirm the timing and amount of each instalment from the repayment schedule.
Questions to ask before accepting
- Does the name of the lender and loan product match the offer?
- Is the APR clear, and does the listed fee information match what you were told?
- Are the instalment dates, amounts and tenure understandable?
- Have you received the KFS and time to review it before agreeing?
- Do you know how to contact the lender through its official channel?
Keep a copy of the KFS, agreement and payment records. Never rely solely on a verbal promise or an unofficial agent’s message. RBI rules and product terms can change; consult the latest official circular and the lender’s documents for the transaction.
Official source: Reserve Bank of India – Key Facts Statement for Loans & Advances
Disclaimer: This article is general financial information, not personal financial or legal advice, and does not recommend borrowing. Eligibility, charges and terms depend on the lender and product. Read current official documents and consider your own circumstances before making a financial decision.
