ENA MSME 2024-04-16 15:42:38 <p><span style="font-size:14px"><strong>New Delhi, Apr 16 (KNN)</strong> In a move to empower borrowers and promote informed financial decision-making, the Reserve Bank of India (RBI) has issued comprehensive guidelines regarding Key Facts Statements (KFS) for retail and MSME term loans.</span></p> <p><span style="font-size:14px">These guidelines, applicable from October 1, 2024, aim to harmonise instructions across all regulated entities, including banks, cooperative banks, and non-banking financial companies.</span></p> <p><span style="font-size:14px">The KFS is a standardised statement that lenders must provide to prospective borrowers, outlining the key facts of a loan agreement in simple, easy-to-understand language.</span></p> <p><span style="font-size:14px">Industry bodies like Federation of Indian Micro and Small &amp; Medium Enterprises (FISME) have consistently raised voice against hidden charges and foreclosure charges imposed by Banks.</span></p> <p><span style="font-size:14px">The new statement will include legally significant and deterministic facts, such as the loan amount, tenure, instalment details, interest rate, fees/charges, and the Annual Percentage Rate (APR).</span></p> <p><span style="font-size:14px">The statements will have a unique proposal number and validity period for borrowers to consider terms. They will include an APR computation sheet encompassing all lender charges.</span></p> <p><span style="font-size:14px">Any fees not mentioned cannot be charged without borrower consent. Key Facts Statements must be included as summary boxes in loan agreements.</span></p> <p><span style="font-size:14px">The guidelines also address specific requirements for collaborative lending arrangements and digital loans, ensuring transparency regarding funding proportions, blended interest rates, and cooling-off periods.</span></p> <p><span style="font-size:14px">Industry experts have welcomed the move, citing the need for increased transparency and standardisation in the lending sector.</span></p> <p><span style="font-size:14px">The RBI's directive is a significant step towards empowering consumers and promoting responsible lending practices across India's financial landscape.</span></p> <p><span style="font-size:14px">For more information, kindly visit: <a href="https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12663&amp;Mode=0">https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12663&amp;Mode=0</a></span></p> <p><span style="font-size:14px"><em><strong>(KNN Bureau)</strong></em></span></p> 37441 https://knnindia.co.in/news/newsdetails/msme/no-hidden-fees-in-retail-msme-loans-rbi-mandates-kfs-from-oct-1 2024-04-16 15:42:38 knnindia.co.in