Bank will have to give all information while giving loan to the customer, RBI issued instructions

Customers who take out retail and micro, small, and medium-sized business (MSME) loans from banks and non-banking financial companies (NBFCs) will be required to receive full disclosure about the loan agreement (KFS), including interest and other costs, starting on October 1. This also applies to new loans made to current clients. This directive from the RBI will apply to term loans given by all entities (REs) under its regulation, including retail and MSME.

The bank on Monday said it has been decided to harmonize the instructions on KFS for loans. This decision has been taken to increase transparency and remove the lack of information regarding the products of financial institutions coming under the purview of RBI. With this, borrowers will also be able to make informed financial decisions. The KFS is a simple language description of the key facts of the loan agreement. It is given to borrowers in a standardized format.

RBI said, financial institutions will take necessary measures to implement the guidelines as soon as possible. In the case of all retail and MSME term loans sanctioned after October 1, the instructions will be followed in letter and spirit without any exception.