RBI's New Mandate: Enhanced Loan Pricing Transparency For Retail & MSME Borrowers

New Delhi, Feb 9 (KNN) The Reserve Bank of India (RBI) is set to implement measures aimed at enhancing transparency in the financial services sector.

These measures will require banks and other regulated entities (REs), including non-banking finance companies (NBFCs), to disclose detailed information regarding the pricing of loans and associated charges for retail and Medium, Small, and Micro Enterprise (MSME) customers.

Under the new directives, all REs will be obligated to furnish a 'Key Fact Statement' (KFS) to borrowers for all retail and MSME loans.

“Providing critical information about the terms of the loan agreement, including all-inclusive interest cost in simple and easily understandable format, will greatly benefit the borrowers in making an informed decision,” it said.

Presently, the KFS is mandated specifically for loans provided by scheduled commercial banks to individual borrowers, digital lending by REs, and microfinance loans, as per RBI.

Additionally, the RBI has proposed the introduction of an offline functionality within the CBDC-Retail (CBDC-R), also known as e-rupee or digital rupee. This move aims to facilitate transactions in regions with poor or limited internet connectivity.

“Multiple offline solutions (proximity and non-proximity based) across hilly, rural and urban locations will be tested for this purpose. These functionalities will be introduced through the pilots in a gradual manner,” the central bank said.

Furthermore, the CBDC-R pilot initiative, which currently facilitates person-to-person (P2P) and person-to-merchant (P2M) transactions using digital rupee wallets, will be expanded to incorporate additional use cases through programmability and offline functionality.

Programmability will enable users, such as government agencies and corporations, to customise payments for specific purposes, enhancing efficiency and control.

(KNN Bureau)