Key fact statement requirements, which were previously only required for a specific type of lenders, were extended by the RBI on Thursday for all retail and MSME loans.
Following this, all banks will be required to provide a statement detailing processing fees and other costs for all retail and MSME loans. The statement will assist the customer in understanding the interest rate they are paying as well as the fees and other expenses associated with it. According to Governor Das, banks must fully disclose to borrowers the total cost of a loan, including all fees and extra charges.
For retail and MSME loans, the purpose of the Key Fact Statement is to give clients a comprehensive picture of the total cost of the loan as well as the actual annualized interest rate.
What does that signify?
The interest rate must be stated in KFS in its entirety. Customers should therefore be aware of the potential cost of such fines. Even FinTechs and other organizations are required to supply all of this information in a standard format if you take out a loan from them.
A framework based on principles has also been presented by the Central Bank to be used for digital transaction authentication. "Over the years the Reserve Bank has proactively facilitated the introduction of various mechanisms such as additional factor of authentication (AFA) for securing digital payments," RBI Governor Shaktikanta Das said, announcing the decisions of the Monetary Policy Committee. "The Reserve did not specify a specific method, although SMS-based one-time passwords, or OTPs, have gained a lot of traction. It is suggested to establish a framework based on principles for the authentication of digital payments in order to enable alternative authentication procedures and improve the security of these kinds of transactions," he added.
