Comparing Home Loan Offers? How Bengaluru Buyers Read the RBI Key Facts Statement and APR

Two sanction offers sit side by side on a Bengaluru buyer's laptop. One bank quotes 8.40 percent. The other quotes 8.50 percent. The decision looks obvious until the fine print surfaces: the lower rate comes with an Rs 1 lakh processing and documentation bill, while the higher one charges Rs 30,000. Which loan is actually cheaper? Since October 1, 2024, a single document is supposed to answer that question before you sign: the Key Facts Statement.

The short answer. The RBI circular dated April 15, 2024 requires banks and NBFCs, including housing finance companies, to give borrowers of retail and MSME term loans a Key Facts Statement in a standard format, showing the Annual Percentage Rate, which includes the interest rate and all other charges, plus an APR computation sheet and the full amortisation schedule. The KFS carries a unique proposal number and stays valid for at least three working days for loans of seven days or longer, and charges not mentioned in it cannot be levied later without your explicit consent. The trade-off: APR is the best single comparison number, but it assumes you keep the loan for its full tenor, so it can point the wrong way if you plan to prepay early.

What does the KFS rule require?

The RBI circular on Key Facts Statement for Loans and Advances, reference RBI/2024-25/18, applies to commercial banks including small finance, local area and regional rural banks but excluding payments banks, to primary urban, state and central co-operative banks, and to NBFCs including housing finance companies. It covers all retail and MSME term loans, with credit card receivables exempted.

The circular says the KFS must follow a standardised format, be written in a language the borrower understands, and be explained to the borrower, with an acknowledgement obtained that the borrower has understood it. It must also be exhibited as a summary box within the loan agreement. The circular says it applies to all new retail and MSME term loans sanctioned on or after October 1, 2024, including fresh loans to existing customers.

RBI has since consolidated many lending rules into master directions. The NBFC credit facilities directions dated November 28, 2025, for example, say an NBFC shall provide a KFS as per instructions in the NBFC Responsible Business Conduct Directions, 2025. Ask your lender which current RBI direction its KFS follows.

What is APR, and why is it the number to compare?

The circular defines APR as the annual cost of credit to the borrower, which includes the interest rate and all other charges associated with the credit facility. It requires the KFS to include a computation sheet of APR and the amortisation schedule over the loan tenor.

It also says charges recovered by the lender on behalf of third parties on an actual-cost basis, such as insurance or legal charges, form part of the APR and shall be disclosed separately. In other words, the headline rate is only one input. The APR folds the fees in.

Here is the comparison from the opening, using illustrative numbers, a loan of Rs 80 lakh over 20 years, and our own internal rate of return method. Your lender's KFS will show its own computation sheet.

The two measures disagree, and that is the lesson. APR weights the upfront fee heavily because money paid at the start costs more than money paid later. Total rupee outflow ignores timing. If you expect to hold the loan for 20 years at an unchanged rate, Offer B saves about Rs 51,000. If you expect to prepay or switch within a few years, the extra Rs 70,000 paid upfront on Offer B may never be recovered through the Rs 506 monthly saving, because it takes roughly 138 months of that saving to cover the gap without even counting interest. Floating rates will also move, so treat both columns as a starting point.

How long does a KFS offer stay valid?

The circular says each KFS shall have a unique proposal number, and a validity period of at least three working days for loans with a tenor of seven days or more, and one working day for shorter tenors. The validity period is the time available to the borrower, after receiving the KFS, to agree to the loan terms. If you agree within that period, the lender is bound by the terms in the KFS.

For a home loan, that gives you at least three working days to compare offers on equal terms. Use them. Ask each lender for its KFS early, so the validity windows overlap and you are not comparing a firm offer against a verbal quote.

Can a lender add charges that are not in the KFS?

Not without asking you. The circular says any fees or charges not mentioned in the KFS cannot be charged by the lender to the borrower at any stage during the term of the loan without the explicit consent of the borrower.

The circular also says receipts and documents for third-party charges shall be provided to the borrower within a reasonable time. Keep them, because they let you check that what you paid matches what the KFS disclosed. If a lender later tries to add an unlisted charge, the KFS is your written baseline. For a lender that ignores your written objection, our guide to the RBI Ombudsman for home loan complaints explains the next step, and which lenders it covers.

How does the KFS fit with fixed versus floating choices?

The KFS describes the loan you are being offered on the day it is issued. It does not predict future rate changes on a floating loan. That is why the rate type, reset terms and any conversion charges deserve their own reading. We set out the fixed and floating trade-off, with break-even EMIs at the current repo rate, in our explainer on fixed versus floating home loans.

If you are still deciding which flat the loan is for, our profile of Between the Greens in Varthur is one example of the project detail worth matching against your loan amount and tenor.

Does the KFS rule cover a loan you already have?

The circular's applicability paragraph speaks of new retail and MSME term loans sanctioned on or after October 1, 2024, and it expressly includes fresh loans to existing customers. It does not set out a requirement for loans sanctioned before that date. If your home loan is older, the terms you signed at the time, and the disclosures your lender gave then, remain the reference point.

The "fresh loans to existing customers" wording matters for Bengaluru owners who take a top-up loan or move a loan to a new lender for a lower rate. Each of those is a new sanction, so ask for a KFS for it, and compare its APR against what you are paying now. A balance transfer that lowers the headline rate but adds processing, legal and valuation charges may look different once those charges are folded into the APR, especially on a shorter remaining tenor.

For borrowers with an existing loan, the KFS also gives you a template of what to ask for. Even where it is not mandatory, a lender should be able to tell you your current rate, the charges you are liable for and your remaining schedule in writing.

What should you do when collecting loan offers?

Collect offers in a way that lets the KFS do its job.

1. Ask each lender for a KFS with a unique proposal number, not just a rate quote, and note the date it was issued.
2. Check that each KFS states the APR and includes the APR computation sheet and the amortisation schedule.
3. List every fee and third-party charge shown, including insurance and legal charges, which the circular says form part of APR.
4. Compare APRs first, then compare total rupee outflow over the period you realistically expect to hold the loan.
5. Decide within the validity period, which is at least three working days for a home loan, so the lender is bound by the KFS terms.
6. Check that the summary box in the loan agreement matches the KFS you accepted.
7. Object in writing to any charge that was not in the KFS, since the circular bars such charges without your explicit consent.

Frequently asked questions

What is a Key Facts Statement for a home loan?

Under the RBI circular dated April 15, 2024, a KFS is a standard-format statement for retail and MSME term loans that sets out the loan terms, including the Annual Percentage Rate, an APR computation sheet and the amortisation schedule. It applies to banks and NBFCs, including housing finance companies, for loans sanctioned from October 1, 2024.

What does APR include?

The circular defines APR as the annual cost of credit to the borrower, which includes the interest rate and all other charges associated with the credit facility. Charges recovered on behalf of third parties at actual cost, such as insurance or legal charges, also form part of APR and are disclosed separately.

How long is a KFS valid?

Each KFS carries a unique proposal number and must have a validity period of at least three working days for loans with a tenor of seven days or more. If the borrower agrees to the loan within that validity period, the lender is bound by the terms set out in the KFS.

Can my lender add a fee that was not in the KFS?

The RBI circular says any fees or charges not mentioned in the KFS cannot be charged by the lender at any stage during the term of the loan without the explicit consent of the borrower. Keep your accepted KFS as the baseline and object in writing to any new charge.

Last updated 2026-11-14. PropNewz Team.