The Reserve Bank of India (RBI) has directed all banks and regulated entities that it cannot levy additional fees on loans that are not previously disclosed in the Key Fact Statement (KFS).
Key points
- These instructions are issued under sections 21, 35A and 56 of the Banking Regulation Act, 1949, sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934, and sections 30A and 32 of the National Housing Bank Act, 1987.
- This initiative strives to boost transparency and empower borrowers to make informed financial choices.
- This will help borrowers take an informed view before executing a loan document, retail and MSME term loans. Credit card receivables are exempted from the same.
- Key Facts Statement (KFS) is a statement of key facts of a loan agreement, in simple and easier to understand language, provided to the borrower in a standardised format.
