RBI Issues New Rules For Banks Giving Loans To Individuals, MSMEs

In a move which makes the process of granting loans more transparent, RBI has made it mandatory for banks and NBFCs to include all charges and fees applicable on loans a part of the interest payable on it. This will make the cost of borrowing for individuals and MSMEs transparent and remove all hidden costs which may surprise the borrower at a later date. The bank will also provide a Key Fact Statement (KFS) to the borrower with information such as all-inclusive annual percentage rate, and also details of recovery and grievance redressal mechanism. Banks will be given some time to implement the new rules. The RBI has also announced that it will increase security on Aadhaar-enabled payment systems and bring a principle-based framework for digital transactions.