Home Loan KFS: Three Working Days, One APR, and No Charges Outside It
RBI's April 15, 2024 circular on Key Facts Statements requires lenders to give prospective borrowers a standardised KFS with a unique proposal number, a validity of at least three working days for loans of seven days or more, an APR covering all charges and an amortisation schedule. This guide shows Bengaluru buyers how to use those rules to compare offers, with illustrative APR math.
Two home loan offers sit on a Bengaluru kitchen table. One quotes 8.40 percent with Rs 90,000 in fees and charges. The other quotes 8.60 percent with Rs 10,000. On an Rs 80 lakh, 20 year loan, the first EMI is lower by about Rs 1,013 a month. But which loan actually costs less? The Reserve Bank of India's rules on the Key Facts Statement, or KFS, were written to answer exactly that, through a single number called the annual percentage rate.
The rules also give you time. A KFS must stay valid for at least three working days, and if you accept within that window, the lender is bound by what it says. This guide explains what the April 15, 2024 circular requires and how to use it before you sign. It is buyer guidance, not a recommendation of any lender or loan.
The short answer. RBI's April 15, 2024 KFS circular requires lenders to give every prospective borrower a standardised KFS with a unique proposal number, valid for at least three working days for loans of seven days or more, plus an APR computation sheet and an amortisation schedule. The APR includes all charges, and fees not in the KFS cannot be charged later without your explicit consent. In our illustration, the 8.40 percent offer with Rs 90,000 of charges works out to an APR of about 8.56 percent, below the 8.60 percent offer's APR of about 8.62 percent. The trade-off: APR captures upfront costs well, but it assumes you keep the loan for its full term, so a lower APR is not automatically better if you plan to prepay or switch early.
What does RBI's KFS circular require?
A standard, plain language summary before you commit. The circular says lenders shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, in the standardised format set out in its annex. The KFS shall be written in a language understood by the borrower, its contents shall be explained, and the lender shall obtain an acknowledgement that the borrower has understood it.
The circular harmonised earlier instructions and applies to all retail and MSME term loan products extended by regulated entities, which it addresses as commercial banks including small finance banks, local area banks and regional rural banks but excluding payments banks, co-operative banks, and NBFCs including housing finance companies. All new retail and MSME term loans sanctioned on or after October 1, 2024, including fresh loans to existing customers, had to comply in letter and spirit. Credit card receivables are exempt.
How does the three working day validity protect you?
It stops the offer from changing while you think. The circular says the 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. It explains that validity period means the time available to the borrower, after receiving the KFS, to agree to the terms of the loan. The lender shall be bound by the terms indicated in the KFS if the borrower agrees to them during that period.
For a home buyer, those three working days are valuable. They are enough to collect KFS documents from two or three lenders, put the numbers side by side and ask questions, without the risk that the rate or fees quoted in a document you hold will shift before you decide.
What goes into the APR, and why does it matter?
Everything you pay to borrow. The circular defines the annual percentage rate as the annual cost of credit to the borrower, including the interest rate and all other charges associated with the credit facility. It says the KFS shall include a computation sheet of the APR and the amortisation schedule over the loan tenor, and that the APR will include all charges levied by the lender.
Third party costs count too. Charges the lender recovers on behalf of third party service providers on an actual basis, such as insurance and legal charges, shall also form part of the APR and be disclosed separately. Wherever the lender is involved in recovering such charges, it shall give the borrower receipts and related documents for each payment within a reasonable time.
The table below shows why the headline rate alone can mislead. It uses an Rs 80 lakh loan over 20 years and the standard EMI formula. To approximate APR, we found the monthly rate at which the EMIs equal the loan amount minus upfront charges, and multiplied it by 12. The figures are illustrative only. Your lender's KFS computation sheet will show its own method and numbers.
| Illustrative offer | Upfront charges | Monthly EMI | Approximate APR |
|---|---|---|---|
| 8.50 percent, no charges | Nil | Rs 69,426 | 8.50 percent |
| 8.50 percent with charges | Rs 40,000 | Rs 69,426 | 8.57 percent |
| 8.50 percent with higher charges | Rs 1,00,000 | Rs 69,426 | 8.67 percent |
| 8.40 percent, charge heavy | Rs 90,000 | Rs 68,920 | 8.56 percent |
| 8.60 percent, charge light | Rs 10,000 | Rs 69,933 | 8.62 percent |
On these assumptions, every Rs 40,000 or so of upfront charges adds roughly 0.07 percentage points to the APR on an Rs 80 lakh, 20 year loan. A rate that is 0.20 points lower can more than make up for Rs 80,000 of extra charges over the full term. That is the comparison the APR is designed to make easy.
What does the amortisation schedule in the KFS tell you?
How quickly the loan actually shrinks. Because the circular requires the KFS to include the amortisation schedule over the loan tenor, you can see the interest and principal in every instalment before you sign. On our illustrative Rs 80 lakh loan at 8.50 percent over 20 years, interest in the first 12 EMIs comes to about Rs 6.74 lakh, and the balance after a year is still about Rs 78.41 lakh. After five years, total interest paid is about Rs 32.16 lakh and about Rs 70.50 lakh is still owed.
Checking these lines in each lender's schedule is a quick way to confirm that the EMI, rate and tenure in the KFS are consistent with each other. If two lenders quote the same rate and tenure but their schedules show different balances, ask why before the validity period runs out.
One more point applies if you take a loan through a digital process. A footnote to the KFS circular partly modified RBI's digital lending guidelines: a borrower shall be given an explicit option to exit a digital loan during the cooling off period by paying the principal and the proportionate APR without any penalty, with that period set by the lender's board but not less than one day.
Can a lender add charges later that are not in the KFS?
Not without your explicit consent. 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 borrower's explicit consent. It also says the KFS shall be included as a summary box exhibited as part of the loan agreement.
That gives you a reference document for the life of the loan. If a statement shows a fee you do not recognise, check it against the KFS summary box first. If it is not there, ask the lender to show when you gave explicit consent for it.
How should a Bengaluru buyer use the KFS before signing?
Gather, compare and question within the validity window. If you are buying under construction and the loan will be disbursed in stages, ask how the lender's figures treat that. Our explainer on interest from disbursement, not sanction covers staged loans. If you are pricing a specific flat, such as one at Sobha Mullur on Sarjapur Road, request a KFS for the exact loan amount you will need, not a round figure.
- Ask each shortlisted lender for a KFS with a unique proposal number for your exact loan amount and tenure.
- Note the date and time you receive each KFS, and count three working days from then.
- Check that each KFS shows the APR computation sheet and the full amortisation schedule.
- List every charge in the KFS, including insurance, legal and valuation charges collected for third parties.
- Compare offers on APR, then on EMI, then on the reset and prepayment terms stated in the documents.
- Ask the lender to explain any line you do not understand, and confirm you received the KFS in a language you understand.
- Accept your chosen offer within its validity period and keep the KFS with your loan agreement for the life of the loan.
Is APR the only number that matters?
No, and the KFS itself shows why. APR assumes you keep the loan for its full tenor. If you expect to prepay heavily, sell within a few years or switch lenders, upfront charges are spread over a shorter period and weigh more than the APR suggests. A floating rate loan's actual cost also depends on future resets, which no KFS can predict. Use the APR to rank offers on equal terms, then look at the amortisation schedule, the reset terms and your own plans. For a fuller comparison method, see our earlier guide to comparing home loan offers using the KFS and APR.
Frequently asked questions
How long is a home loan Key Facts Statement valid?
RBI's April 15, 2024 circular says a 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. If you agree to the terms within that period, the lender is bound by the terms of the loan indicated in the KFS.
What does the APR in a KFS include?
The circular defines APR as the annual cost of credit to the borrower, including the interest rate and all other charges associated with the credit facility. It says APR will include all charges levied by the lender, and that charges recovered on behalf of third parties, such as insurance and legal charges, also form part of the APR.
Can a lender add a fee that was not in my KFS?
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 borrower's explicit consent. Keep your KFS with the loan agreement, where it must also appear as a summary box.
Which loans must come with a KFS?
The harmonised instructions apply to all retail and MSME term loan products extended by regulated entities, including banks, co-operative banks and NBFCs including housing finance companies. All new retail and MSME term loans sanctioned on or after October 1, 2024, including fresh loans to existing customers, had to comply. Credit card receivables are exempt.
Last updated 2026-11-02. PropNewz Team.
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