Skip to main content

Key Facts Statement (KFS) for Loans & Advances

Reserve Bank of India (RBI) has revised the guidelines on Key Facts Statement (KFS) for loans & advances.

What are Key Facts?

Key Facts of a loan agreement between a regulated entity (RE) / a group of REs and a borrower are legally significant and deterministic facts that satisfy basic information required to assist the borrower in taking an informed financial decision.

What is Key Facts Statement (KFS)?

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.

What is Annual Percentage Rate (APR)?

Annual Percentage Rate (APR) is the annual cost of credit to the borrower which includes interest rate and all other charges associated with the credit facility.

What is Equated Periodic Instalment (EPI)?

Equated Periodic Instalment (EPI) is an equated or fixed amount of repayments, consisting of both the principal and interest components, to be paid by a borrower towards repayment of a loan at periodic intervals for a fixed number of such intervals; and which result in complete amortisation of the loan. EPIs at monthly intervals are called EMIs.

What are the guidelines on KFS?

  • REs shall provide a KFS (in standardised format) to all prospective borrowers to help them take an informed view before executing the loan contract. 
  • The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he / she has understood the same.
  • The KFS shall be provided with a unique proposal number and shall have a validity period of at least 3 working days for loans having tenor of 7 days or more, and a validity period of 1 working day for loans having tenor of less than 7 days. Validity period refers to the period available to the borrower, after being provided the KFS by the RE, to agree to the terms of the loan. 
  • The KFS shall also include a computation sheet of APR, and the amortisation schedule of the loan over the loan tenor. APR will include all charges which are levied by the RE. 
  • Charges recovered from the borrowers by the REs on behalf of third-party service providers on actual basis, such as insurance charges, legal charges etc., shall also form part of the APR and shall be disclosed separately. In all cases wherever the RE is involved in recovering such charges, the receipts and related documents shall be provided to the borrower for each payment, within a reasonable time.
  • Any fees, charges, etc. which are not mentioned in the KFS, cannot be charged by the REs to the borrower at any stage during the term of the loan, without explicit consent of the borrower.
  • The KFS shall also be included as a summary box to be exhibited as part of the loan agreement.

To which loans shall the guidelines be applicable?

The guidelines on KFS shall be applicable in cases of all retail and Micro Small and Medium Enterprises (MSME) term loan products extended by all RE.

Which credit facilities are exempted from the applicability of the guidelines?

Credit card receivables are exempted from the applicability of the guidelines.

By when shall the guidelines be implemented?

REs shall implement the guidelines at the earliest. In any case, all new retail and MSME term loans sanctioned on or after October 1, 2024, including fresh loans to existing customers, shall comply with the guidelines in letter and spirit without any exception. 

During the interregnum, the relevant provisions on ‘KFS / Factsheet’ under the extant guidelines shall continue to remain applicable and on the date the revised guidelines come into effect, the below listed provisions shall stand repealed. 

  • Para 2 (b) of Circular on ‘Display of Information by Banks’ dated January 22, 2015
  • Para 6.3, 6.4 & 6.5 of ‘Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022’ dated March 14, 2022
  • Para 5.1, 5.2 of ‘Guidelines on Digital Lending’ dated September 02, 2022


References

Reserve Bank of India. (2015, January 22). 'Display of information by banks'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9508&Mode=0

Reserve Bank of India. (2022, September 02). 'Guidelines on Digital Lending'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12382&Mode=0

Reserve Bank of India. (2022, March 14). 'Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 (Updated as on July 25, 2022)'. Retrieved from https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12256

Reserve Bank of India. (2024, April 15). 'Key Facts Statement (KFS) for Loans & Advances'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12663&Mode=0

Reserve Bank of India. (n.d.). 'Annex A - Standardised Format of KFS'. Retrieved from https://rbidocs.rbi.org.in/rdocs/content/pdfs/CIRCULARKFS1504242_A.pdf


Follow at - Telegram   Instagram   LinkedIn   X   Facebook

Labels:

Comments

Post a Comment

Popular Posts

Credit Facilities – Lending against Gold and Silver Collateral

Reserve Bank of India (RBI) has issued directions on credit facilities offered by various regulated entities. This article summarises the directions applicable to lending against gold and silver collateral. To whom are the directions applicable? The directions are applicable to the following Regulated Entities (REs) – Commercial Banks  Small Finance Banks (SFBs) Local Area Banks (LABs) Regional Rural Banks (RRBs) Primary (Urban) Co-operative Banks (UCBs) Rural Co-operative Banks – State Co-operative Banks (StCBs) Central Co-operative Banks (CCBs) Non-Banking Financial Companies (NBFCs) for all layers – Deposit taking NBFC (NBFC-D) NBFC-Investment and Credit Companies (NBFC-ICC) NBFC-Factor  NBFC-Micro Finance Institutions (NBFC-MFI)  NBFC-Infrastructure Finance Company (NBFC-IFC)  Infrastructure Debt Fund-NBFC (IDF-NBFC)  Housing Finance Company (HFC)  To whom are the directions partially applicable? The prudential regulations are not applicable to ‘NBFCs-B...
Post a Comment
Read more

Highlights of RBI Annual Report 2025-26 – Chapter 1 to 3

Reserve Bank of India (RBI) has published its annual report for the financial year 2025-26. In a series of articles, we will go through the highlights of the report. This is the first article in the series.  Legal framework for publication of Annual Report by the RBI Report of the Central Board of Directors on the working of RBI for the year is submitted to the Central Government in terms of Section 53(2) of the RBI Act, 1934. The letter of transmittal is signed by the RBI Governor and addressed to the Finance Secretary, Ministry of Finance, Government of India. Documents submitted by the RBI to the Central Government In pursuance of Section 53(2) of the RBI Act, 1934, the following documents have been submitted to the Central Government – A copy of the Annual Accounts for the year ended March 31, 2026 certified by the RBI’s Auditors and signed by Chief General Manager-in-charge, all the Deputy Governors and Governor. 2 copies of the Annual Report of the Central Board on the workin...
Post a Comment
Read more

Credit Facilities – Digital Lending Guidelines

Reserve Bank of India (RBI) has issued directions on credit facilities offered by various regulated entities. This article summarises the directions applicable to digital lending. To whom are the directions applicable? The directions are applicable to the following Regulated Entities (REs) – Commercial Banks  Small Finance Banks (SFBs) Local Area Banks (LABs) Regional Rural Banks (RRBs) Primary (Urban) Co-operative Banks (UCBs) Rural Co-operative Banks – State Co-operative Banks (StCBs) Central Co-operative Banks (CCBs) All India Financial Institutions (AIFIs) regulated by RBI – Export Import Bank of India (EXIM Bank) National Bank for Agriculture and Rural Development (NABARD) National Housing Bank (NHB) Small Industries Development Bank of India (SIDBI) National Bank for Financing Infrastructure and Development (NaBFID) Non-Banking Financial Companies (NBFCs) for all layers – Deposit taking NBFC (NBFC-D) NBFC-Investment and Credit Companies (NBFC-ICC) NBFC-Factor  NBFC-Micro...
Post a Comment
Read more

Credit Facilities – Finance to Non-Banking Financial Companies (NBFCs)

Reserve Bank of India (RBI) has issued directions on credit facilities offered by various regulated entities. This article summarises the directions applicable in respect of finance to Non-Banking Financial Companies (NBFCs). To whom are the directions applicable? The directions are applicable to the following Regulated Entities (REs) – Commercial Banks  Small Finance Banks (SFBs) Primary (Urban) Co-operative Banks (UCBs) All India Financial Institutions (AIFIs) regulated by RBI – Export Import Bank of India (EXIM Bank) National Bank for Agriculture and Rural Development (NABARD) National Housing Bank (NHB) Small Industries Development Bank of India (SIDBI) National Bank for Financing Infrastructure and Development (NaBFID) What are the conditions on finance to NBFCs? Commercial Banks and SFBs The bank shall extend need based working capital facilities as well as term loans to NBFCs registered with the RBI and engaged in infrastructure financing, equipment leasing, hire-purchase, l...
Post a Comment
Read more

Credit Facilities – Gold Metal Loans

Reserve Bank of India (RBI) has issued directions on credit facilities offered by various regulated entities. This article summarises the directions applicable to gold metal loans. To whom are the directions applicable? The directions are applicable to the following Regulated Entities (REs) – Commercial Banks  Small Finance Banks (SFBs) What is Gold Metal Loans’ (GML)? Gold Metal Loans (GML) mean loans extended by eligible banks to specified borrowers in the form of gold metal. GMS-linked GML – means GML extended by designated banks under the Gold Monetization Scheme, 2015 (GMS), utilising – (i) the gold deposit accepted by them as Short-term Bank Deposit under the GMS, or (ii) gold borrowed from other designated banks under GMS, and where the repayment can be either in gold or in cash or in a combination of both. Import-linked GML – means GML extended by nominated banks authorized to import gold, where the source of gold metal lent is gold imported by them, and where repayment h...
Post a Comment
Read more