RBI Forces Lenders: See Your Loan's True Cost

RBI is pushing banks and NBFCs to fully disclose all loan charges upfront — interest rate, fees, penalties — so borrowers finally know the real cost before signing. Hidden charges may soon be banned.

Here's what happened: RBI is mandating lenders to provide a Key Fact Statement (KFS) disclosing the Annual Percentage Rate — covering interest, all fees, and penalties — before any retail loan is sanctioned.. Hidden charges like processing fees, forced insurance bundling, and prepayment penalties must now be itemised separately and disclosed upfront, not buried in fine print post-approval.. Borrowers will get a cooling-off window after receiving the KFS, during which they can cancel the loan without penalty — a first-of-its-kind consumer protection in Indian retail lending..

What you should do: Ask your lender for the Annual Percentage Rate (APR), not just the interest rate — the APR includes all fees and is the only true apples-to-apples comparison number.. Check if any insurance product was bundled into your loan disbursement without your explicit written consent — if yes, you may have grounds to request its removal or a refund.. Compare loan offers using the KFS document once mandated — the lender with the lowest headline rate is often NOT the cheapest after fees; always calculate total repayment amount..

The APR on a co-branded or fintech personal loan can run 4–6% above the advertised rate. Always ask: 'What is my total repayment amount over the full tenure?' — that single number exposes everything.