Taking out a bank loan can be a stressful experience, especially if one is not aware of the charges that could be levied by the lender over and above the loan interest rate. To be sure, some lenders do share all such charges in a key fact statement (KFS) before the loan agreement is signed, but not all borrowers keep an eye out for it. But its importance is underscored by the fact that the Reserve Bank of India (RBI) last week made it mandatory for all lenders to provide the KFS to all borrowers.
The KFS is a one-page document that contains information such as the rate of interest, loan amount, loan term, processing fees, documentation charges, foreclosure charges and late payment fee, among others. Certain categories of lenders also disclose an all-inclusive annual percentage rate (APR) and recovery and grievance redress mechanism in the KFS.
"Historically, the cost of borrowing has been opaque for many consumers.
Interest rates were prominently advertised, but the additional fees that significantly affect the overall cost were often disclosed in a less transparent manner.
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Denne historien er fra February 16, 2024-utgaven av Mint Mumbai.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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India's economic performance is pretty robust on most counts
The economy's back on its high-growth path and fiscal consolidation is on track but our labour market remains a concern
We should be more receptive to paradigm-shifting ideas
Do we really have free will? Our brains are not wired to accept radical thoughts easily but we must try
We need to invest in nature for the sake of humanity's future
Money must flow into what saves rather than harms biodiversity
Is gold worth its weight amid our demat assets?
It has been a buzzy buy in recent times, with its price soaring over the past year. Investors, however, are likely to be better served by going for intangible forms of this precious metal
The country needs to map its informal economy better
We need more accurate data on enterprises that play a major role in employing people
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