Definition
Key Fact Statement (KFS)
A Key Fact Statement is a standardised, plain-language summary a lender must give a borrower showing the all-in cost of a loan, including the annual percentage rate and all charges.
RBI mandates a KFS for retail and digital loans so borrowers see, in one place, the loan amount, tenure, interest rate, all fees, and the Annual Percentage Rate (APR) that bundles interest plus charges into a single comparable figure.
It also discloses the recovery mechanism, cooling-off period and grievance details. The aim is to prevent hidden costs and let borrowers compare offers on a like-for-like basis before signing.
For digital loans especially, the KFS must be shared before disbursal, making it a key consumer-protection document under the digital lending rules.
Related terms
- Buy Now Pay Later (BNPL)Buy Now Pay Later is a short-term financing option at checkout that lets you receive goods immediately and pay later, either in one deferred payment or in instalments.
- Digital Lending GuidelinesRBI's Digital Lending Guidelines are rules that govern app- and platform-based lending in India to ensure transparency, fair practices and protection of borrowers' data.
- APRThe Annual Percentage Rate expresses the total yearly cost of a loan — interest plus mandatory fees — as a single percentage, enabling apples-to-apples comparison of credit offers.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.