RBI Policy Meeting: Even though the Reserve Bank has not made any change in the interest rates for the sixth consecutive time, there will be no impact on the EMI of home loan and car loan. But an announcement has been made for small loan customers, which will increase transparency regarding loan cost.
Today the Reserve Bank announced a major change regarding retail loans. Reserve Bank Governor Shaktikanta Das has made it mandatory for banks to provide KFS to customers for all retail, MSME loans. KFS means Key Fact Statement. The Reserve Bank announced this decision keeping in mind the interests of small borrowers.
This decision of RBI is in the interest of loan takers.
Actually, currently there are many types of other fees and charges in bank loans, which are apart from the interest rate. All these are added to the actual interest rate while calculating the annual interest rate. Now, if banks impose any other charges apart from interest rates, then they will have to add all the charges to the interest rates and declare them. Earlier, the Reserve Bank had made it necessary only for a certain category of lenders.
The purpose of this step of the Reserve Bank is to bring transparency for small and retail loan customers. That is, when they go to take a loan, they should know how much money they are actually paying in terms of interest and how much other charges there are.
Because usually banks attract customers by reducing interest rates, but other charges are quite high. Like processing fees, documentation charges etc. Due to this, the interest actually becomes expensive for the customer. This announcement is a part of transparency measures for other charges imposed by lending institutions apart from interest rates.
It is necessary to give complete information about loan cost to customers
The Reserve Bank Governor said that it is important for banks to inform loan customers about the full cost of the loan including all charges and other charges. The KFS (Key Fact Statement) for Retail and MSME loans has been designed to clearly provide the actual annual interest rate and all financial information related to the loan to the customer. So that the customer taking the loan has complete information about the loan, so that he can be able to take a better decision.
