What is a Key Facts Statement (KFS)?
A standard-format summary of what a loan actually costs.
A disclosure the Reserve Bank requires lenders to give a borrower before sanction, in a prescribed format, stating the all-in cost of the loan as an annual percentage rate. It exists because a headline interest rate is not a price — the price is the rate plus everything else recovered from the borrower.
How is KFS calculated?
From the actual cash flows: what the borrower receives, when, and every amount they pay back including fees. A processing fee deducted at disbursement reduces what was received without reducing what is repaid, which is why the APR is almost always above the headline rate.
KFS: a worked example
₹5 lakh at 18% for 24 months with a 2% processing fee deducted up front means the borrower receives ₹4.9 lakh and repays as though they had received ₹5 lakh. The APR is materially above 18%, and on a shorter tenor the gap widens.
Why does KFS matter?
A charge that was not disclosed in the KFS cannot be recovered from the borrower later. That is a commercial consequence, not a procedural one.
What the regulations say about KFS
The Key Facts Statement requirement, including the prescribed format, the APR definition and the vernacular obligation.
What a lending system has to do about KFS
The KFS is a generated document and the APR is computed from the schedule rather than typed into a field. A typed APR eventually contradicts the schedule printed beside it, and the borrower is holding both.
Related terms
- APR (annual percentage rate) — The all-in cost of a loan, expressed as a yearly rate.
- Penal charges — What a lender may levy for a default — as a charge, not as extra interest.
- Moratorium — A period where repayment is deferred.
- Foreclosure — Closing a loan by paying the whole outstanding early.
From the people who wrote this
Run your lending on Lenviq
The section above describes what a lending system has to do about this term. Lenviq does it — on every account, computed at day-end, with the direction it comes from recorded against it.
Lenviq is loan origination, servicing and accounting for NBFCs, built by FastLegal Technologies.