Before you accept a loan, the lender must hand you a short, standardised document called the Key Fact Statement, or KFS. It is the single most useful page in your loan paperwork: it puts the real cost of the loan and every charge in one place, in a format that lets you compare lenders on equal terms.
What the rule says
The RBI's circular of 15 April 2024 made the KFS mandatory for all retail and MSME term loans sanctioned on or after 1 October 2024, by all regulated lenders — banks and NBFCs alike. Earlier, KFS requirements applied only to certain loans, such as digital loans and microfinance loans. The KFS must be given in a language the borrower understands, and the borrower must acknowledge it.
What a KFS shows
- Loan amount and the amount actually disbursed to you
- Tenure and the number and amount of EMIs
- Interest rate and its type — fixed, floating or hybrid
- Annual Percentage Rate (APR) — the all-in yearly cost, including interest and fees
- All fees and charges — processing fee, insurance, documentation and any third-party charges
- Contingent charges — late payment, bounce, prepayment and foreclosure charges
- Cooling-off or look-up period for digital loans, during which you can exit by paying the principal and proportionate APR
- Recovery and grievance details — how recovery agents may contact you and who the grievance officer is
- An amortisation schedule showing principal and interest in each instalment
Why the APR matters most
The headline interest rate does not include fees. Two offers at the same interest rate can have very different APRs if one carries a higher processing fee or insurance. The APR rolls these into one yearly number, so it is the fairest way to compare offers. If one offer quotes a flat rate, the APR exposes its true cost.
No hidden charges
A charge that is not mentioned in the KFS cannot be levied during the loan without your explicit consent. If you are asked to pay a fee you never saw in the KFS, ask the lender to show where it is disclosed, and use the grievance channel if they cannot.
Questions to ask before you sign
- Is the rate fixed or floating, and how will a floating rate change?
- How much will I actually receive after fees are deducted?
- Is any insurance included, and is it optional?
- What are the prepayment and foreclosure terms? See prepayment and foreclosure.
- What happens, and what does it cost, if an EMI bounces?
- Who do I contact with a complaint?
A good-practice checklist
- Read the KFS before you give consent or e-sign anything.
- Make sure the lender's name on the KFS is a bank or RBI-registered NBFC.
- Make sure the loan will be disbursed into your own bank account — under the RBI's digital lending rules, loans are disbursed directly into the borrower's account.
- Keep a copy of the KFS, sanction letter and agreement.
Estimate your EMI before you compare offers with our EMI calculator.
This guide is general information, not financial advice. Interest rates, fees, eligibility and other terms are set by each lender and can change; the figures in examples are illustrative only. Oxon Fintech is a loan facilitation platform, not a lender — loans are sanctioned and disbursed by our lending partners.