Key Fact Statement and APR on a personal loan: how to read the KFS line by line
What RBI's Key Fact Statement must show for loans sanctioned from 1 October 2024, how APR differs from the interest rate, and what to check before you sign.
The Key Fact Statement (KFS) is a standard summary that every RBI-regulated bank and NBFC must give you before you sign a retail or MSME term loan sanctioned on or after 1 October 2024, including personal loans and fresh loans to existing customers. It shows the loan amount, the interest rate, the annual percentage rate (APR), every fee and charge, the repayment schedule and the grievance contacts, in a language you understand. Two rules make it powerful: any fee or charge not mentioned in the KFS cannot be charged at any stage without your explicit consent, and if you accept within the KFS validity period, the lender is bound by its terms.
This guide is part of the personal loan interest rates overview.
What the KFS contains
RBI's April 2024 circular sets a standard format with a summary box that forms part of the loan agreement. For a personal loan, expect these items (the exact layout and labels are in Annex A of the circular on rbi.org.in):
| Section | What to look for |
|---|---|
| Loan proposal number | A unique number for this offer |
| Loan amount and tenure | Sanctioned amount, number of EMIs, EMI amount and dates |
| Interest rate | Rate and type (fixed or floating); for floating, the benchmark, spread and reset frequency |
| Fees and charges | Processing fee, documentation, insurance and other charges, payable to the lender or collected for third parties |
| APR | Annual cost including interest and all charges |
| Contingent charges | Penal charges, foreclosure and part-prepayment charges, bounce or dishonour charges, switching charges |
| Repayment schedule | Amortisation schedule showing principal and interest in each instalment |
| Recovery | Whether recovery agents may be engaged |
| Grievance redressal | Nodal grievance officer's name and contact |
| Cooling-off / look-up period (digital loans) | Days during which you can exit by repaying principal and proportionate APR |
| Lending service provider details | Name of any LSP or app involved, and its role |
Validity. The KFS must stay valid for at least three working days for loans with a tenor of seven days or more, and one working day for shorter loans. Use that time to compare offers.
Credit cards are excluded. The KFS circular does not cover credit card dues. Loans on credit cards follow the card rules and your issuer's disclosures.
APR versus interest rate
The interest rate tells you what you pay on the outstanding balance. The APR answers a different question: what does this loan cost per year, counting everything I pay to get it? RBI defines APR as the annual cost of credit to the borrower, including interest and all other charges. Charges the lender collects for third parties at actual cost, such as insurance or legal charges, are also included and disclosed separately.
Worked example (illustrative)
A ₹2 lakh personal loan for 2 years at 13%:
- EMI on ₹2 lakh at 13% for 24 months: about ₹9,508
- Processing fee 2% = ₹4,000, GST 18% = ₹720
- Insurance premium deducted: ₹3,000
- Amount actually received: ₹2,00,000 − ₹4,720 − ₹3,000 = ₹1,92,280
Solving for the annual rate at which 24 EMIs of ₹9,508 repay ₹1,92,280 gives an APR of about 17.0%. Remove the insurance, and the APR falls to about 15.4%. The interest rate is 13% in both cases. That is why you compare offers on APR, as shown in the offer comparison worked example.
Ten checks before you sign
- The lender named is the bank or NBFC you expect, not only an app brand.
- The amount and tenure match what you asked for.
- The rate type is clear; for floating, the benchmark and reset frequency are given.
- The APR is shown and is in line with what you were told.
- The processing fee shows GST separately or states that it includes GST.
- Insurance is listed with its premium, and you have been told whether it is optional.
- The repayment schedule sums to the total you expect.
- Foreclosure and part-prepayment terms are stated; for a floating loan to an individual for personal use, there should be no foreclosure charge.
- The penal charge for a late EMI is a stated amount or method, not an extra interest rate.
- The grievance officer's contact is given.
Tick these on the personal loan offer checklist.
Common KFS problems and what to do
| Problem | What to do |
|---|---|
| No KFS was given, or only after disbursal | Ask the lender in writing for the KFS; if the loan was sanctioned on or after 1 October 2024, complain to the grievance officer |
| A charge appears on your statement that is not in the KFS | Ask for reversal citing the KFS; the lender needs your explicit consent for charges not listed |
| APR in the KFS differs from what the sales agent said | Rely on the KFS; ask for a revised KFS if the agreed terms differ |
| KFS in a language you do not understand | Ask for a version in a language you understand; the circular requires it |
| Insurance premium included without your request | Ask whether it is optional; if so, ask for it to be removed before disbursal |
If the lender does not resolve the issue within 30 days, you can escalate to the RBI Ombudsman; see the complaints guide.
Frequently asked questions
Does the KFS apply to loans from NBFCs and apps?
Yes. It applies to RBI-regulated entities including banks and NBFCs, and digital loans from them must also come with a KFS. An app that is only a lending service provider must show the regulated lender's KFS.
What if my loan was sanctioned before 1 October 2024?
The KFS circular applies to loans sanctioned from that date. Older loans are governed by the sanction letter, agreement and earlier disclosure rules.
Can the lender change the charges after I sign?
Not by adding a charge that is not in the KFS without your explicit consent. Changes to charges that are in the agreement must follow the notice terms in your contract.
Is APR the same as the effective interest rate?
They are related. The APR in the KFS is the regulatory figure that includes all charges; "effective rate" is a looser term some lenders use.
Sources
- Reserve Bank of India — circular on Key Facts Statement for loans and advances (April 2024) and the related consolidated directions
- RBI Complaint Management System — complaints if KFS rules are not followed
- Central Board of Indirect Taxes and Customs — GST on financial service charges
