Bank Loan: After October 1, taking loans from banks will become easier. RBI has told all the banks that the customer taking the loan will have to give complete details of the cost incurred on it in writing. With this the customer will be able to easily compare his expenses with other banks.
New Delhi. The method of taking loans from banks will change significantly after October 1. The Reserve Bank (RBI) has said in the notification issued to all the banks and NBFCs that there should now be more clarity on the loan given to the customer. For this, Key Fact Statement (KFS) will be issued by the bank. This will explain the total cost of the loan to the customer in very simple words. After the new rule, the customer taking the loan will be able to know its actual cost. At present, apart from the processing fee and interest rate, no other information is given to the customer by the bank.
Reserve Bank Governor Shaktikanta Das had said after the MPC meeting in April that banks will now have to disclose the annualized percentage rate (APR) i.e. the total cost of the loan to the customers taking loans. This will let the customer know what is the actual cost of the loan he has taken from the bank or NBFC. Its objective is to make the banking process transparent and to provide correct information to the customers.
What is KFS?
The KFS issued by banks will include all the information related to the loan, which will make it easier for the customer to understand how expensive the loan is going to cost him. It will be necessary to mention all the fees and charges being taken by the bank. Banks will not be able to levy any hidden charges other than the information given in KFS. In this, all types of fees and charges being taken by the bank including interest, processing fees will be mentioned.
What is APR?
The Reserve Bank has said in its notification that all banks will inform the loan taking customer about the Annualized Percentage Rate (APR). APR means how much the loan will cost in a year. It also includes details of insurance charges, legal charges and other fees charged by the bank. Along with the complete calculation of the loan, the period for repaying it will also be mentioned in the APR.
What will be the benefit of this?
KFS will be the document received by the customer in which the complete APR calculation will be given. With this, the customer will immediately understand how expensive his loan is actually costing him. With this, customers can easily compare offers from other banks. If a bank refuses to give you KFS, a complaint can be made to the Lokpal. It will be necessary to resolve the complaint within 30 days of receiving it.
