The Reserve Bank of India (RBI) has announced new rules for loan agreements, applicable from October 1, 2024. These rules aim to enhance transparency and provide borrowers with a clearer picture of their loan terms.
Changes for Increased Transparency
Mandatory Key Facts Statement (KFS): Borrowers will receive a KFS document outlining all loan details. Including interest rates and other charges, in a simple and easy-to-understand format. This applies to retail and MSME loans offered by banks and NBFCs regulated by the RBI.
Annual Percentage Rate (APR) Disclosure: The APR will now include loan-related charges like insurance and legal fees, ensuring a more comprehensive picture of the total loan cost.
Transparency in Additional Charges: Any charges beyond those mentioned in the KFS will require the borrower’s explicit consent before being applied.
These RBI loan rules are expected to empower borrowers to make informed financial decisions. Also, promote fairer lending practices across the board.
