No additional charges can be levied on behalf of loans; RBI to banks

 

From October 1, banks and non-banking financial institutions have to provide full details of loan agreement (KFS) including interest and other charges to borrowers of retail, micro, small and medium enterprises. It also includes new loans to existing customers. The proposal will be applicable to retail and MSME term loans offered by all institutions regulated by the RBI.

This decision is to provide all information regarding the services of financial institutions under the purview of RBI and to increase transparency. With this, borrowers can take decisions after knowing all the accurate information about the loan. KFS is a plain language description of key facts of the loan agreement. It is provided by lenders to borrowers. The RBI said financial institutions will take necessary steps to implement the guidelines at the earliest. In the case of all retail and MSME term loans sanctioned after October 1, the instructions should be followed