Home Loan Key Facts Statement: How Bengaluru Buyers Can Use the APR to Compare Offers
The RBI's April 2024 circular requires a Key Facts Statement for retail loans sanctioned from October 1, 2024, showing an APR that includes interest and all charges, third-party fees included. Fees not in the KFS cannot be charged without consent, and home loan KFS stay valid for at least three working days.
When a Bengaluru buyer collects home loan offers from two or three lenders, the headline interest rates are easy to compare. The processing fee, legal and valuation charges, insurance bundled into the loan, and the cost of switching or prepaying are harder to line up. The Reserve Bank of India's answer to that problem is a standard document every lender must hand over before the loan is signed: the Key Facts Statement, or KFS.
The RBI's circular on Key Facts Statement for Loans and Advances, dated April 15, 2024, applies to "all new retail and MSME term loans sanctioned on or after October 1, 2024." With the repo rate raised to 5.50 per cent in October 2026, borrowers comparing offers or refinancing have one more reason to read the KFS line by line, because it is the place where the true cost of credit is meant to appear in one number.
The short answer. The RBI circular defines the KFS as "a statement of key facts of a loan agreement, in simple and easier to understand language," and says it must include the Annual Percentage Rate, "the annual cost of credit to the borrower which includes interest rate and all other charges." Third-party charges such as insurance or legal fees "shall also form part of the APR and shall be disclosed separately," and "Any fees, charges, etc. which are not mentioned in the KFS, cannot be charged by the REs to the borrower at any stage" without explicit consent. The trade-off: the KFS makes offers comparable, but only if the buyer reads it during its validity window, which for longer loans is at least three working days.
What is a Key Facts Statement?
A standard summary of the loan's key terms. The RBI circular describes it as "a statement of key facts of a loan agreement, in simple and easier to understand language," provided in a standardised format. The RBI's FAQ on floating rate resets adds that at sanction, the annualised rate of interest or Annual Percentage Rate "shall be disclosed in the Key Fact Statement (KFS) and the loan agreement."
The circular also requires the KFS to include a computation sheet of the APR and "the amortisation schedule of the loan over the loan tenor." For a home loan, that schedule shows how each EMI splits between interest and principal over the years.
The amortisation schedule is also a useful check later. If a borrower prepays part of the loan, or the rate is reset, a fresh schedule from the lender can be compared with the original one in the KFS to see how the number of EMIs or the EMI amount has changed.
Which loans and lenders does it cover?
Retail and MSME term loans from regulated lenders. The circular is addressed to commercial banks (excluding Payments Banks), urban, state and central co-operative banks, and NBFCs including housing finance companies. It says the harmonised instructions apply to "all retail and MSME term loan products extended by all regulated entities (REs)."
On timing, it says "all new retail and MSME term loans sanctioned on or after October 1, 2024, including fresh loans to existing customers" must comply. The page does not separately address loans sanctioned before that date, so a borrower with an older loan should ask the lender what disclosures apply to it.
The words "including fresh loans to existing customers" matter for borrowers who take a top-up loan, or move a home loan to a new lender through a balance transfer. In both cases a new loan is being sanctioned, so a borrower can ask for the KFS for that new loan and compare its APR with the loan being replaced, rather than relying on a verbal rate quote.
What does the APR include?
Interest and all other charges. The circular defines the APR as "the annual cost of credit to the borrower which includes interest rate and all other charges," covering all charges associated with the credit facility. It adds that charges recovered on behalf of third parties, "such as insurance or legal charges," shall also form part of the APR "and shall be disclosed separately."
This is why two loans at the same interest rate can have different APRs. A lender that bundles insurance or charges higher fees will show a higher APR. For a Bengaluru buyer comparing offers for a flat in a project such as Assetz Canvas and Cove on Begur Road, putting the APRs side by side is a more complete comparison than putting the headline rates side by side.
| KFS feature | What the RBI circular says | Why it matters to a buyer |
|---|---|---|
| Format | Standardised, in simple and easier to understand language | Offers from different lenders can be compared line by line |
| APR | Annual cost of credit including interest and all other charges | One figure for total cost, not just the rate |
| Third-party charges | Insurance, legal and similar charges form part of APR, disclosed separately | Bundled costs become visible |
| Charges not in KFS | Cannot be charged at any stage without explicit consent | Limits surprise fees later |
| Validity | At least three working days for loans of seven days or more | Time to compare before committing |
Can a lender charge a fee that is not in the KFS?
Not without your explicit consent. The circular states: "Any fees, charges, etc. which are not mentioned in the KFS, cannot be charged by the REs to the borrower at any stage" without the borrower's explicit consent. This puts the onus on the lender to disclose fees upfront.
The same principle appears in the RBI's 2025 rules on prepayment. The RBI's Pre-payment Charges on Loans Directions, 2025 require pre-payment charges, where applicable, to be disclosed in the sanction letter, loan agreement and, where required, the KFS, and state that undisclosed pre-payment charges shall not be charged. Our guide to pre-payment charges on floating rate home loans covers those rules in detail.
How long is a KFS valid, and when must it be given?
Before the contract, with time to decide. The circular says the KFS must be provided before the contract is executed, so borrowers can "take an informed view before executing the loan contract." For loans with a tenor of seven days or more, which includes home loans, the KFS must have "a validity period of at least three working days." For loans under seven days, it is "a validity period of one working day."
The validity period works as a short window during which the terms offered should hold, so a buyer can compare them with other offers. Asking for the KFS early, before paying any non-refundable fee, makes best use of that window.
The KFS must also be understood, not just handed over. The circular says "The KFS shall be written in a language understood by such borrowers," that its contents must be explained to the borrower, and that the lender must obtain "an acknowledgement" that the borrower has understood them.
That acknowledgement is a signature that matters. Before signing it, a borrower should be able to state the APR, the EMI, the number of EMIs, and the fees disclosed. If any of these is unclear, ask for an explanation in writing, in a language you read comfortably.
How does the KFS connect to rate resets after the October hike?
Through the disclosures at sanction. The RBI reset FAQ says that at sanction, lenders must disclose the APR in the KFS and the loan agreement, along with "the possible impact of change in benchmark interest rate on the loan." It also says that during the loan, "any increase in the EMI/tenor on account of the external benchmark rate shall be communicated," and quarterly statements must show the principal and interest recovered, EMI amount, EMIs left and annualised rate.
Our explainer on the October 2026 repo rate hike and EMI math shows that on an illustrative Rs 75 lakh, 20 year loan, a rate rising from 8.00% to 8.25% adds about Rs 1,172 to the EMI. A KFS that sets out the benchmark and the impact of a change helps a borrower anticipate that kind of movement.
What should a Bengaluru borrower check in a KFS?
- Ask each lender for the KFS before paying any non-refundable fee.
- Compare the APR across lenders, not only the headline interest rate.
- Look for insurance, legal and other third-party charges shown separately within the APR.
- Read the amortisation schedule to see the interest and principal split over the tenor.
- Check the disclosure on the possible impact of a change in the benchmark rate.
- Confirm the pre-payment and switching charges, if any, are stated in the KFS and sanction letter.
- Sign the acknowledgement only after the contents have been explained in a language you understand.
Frequently asked questions
What is a Key Facts Statement for a home loan?
The RBI's April 15, 2024 circular describes a KFS as a statement of key facts of a loan agreement in simple and easier to understand language, in a standardised format. It must include a computation of the Annual Percentage Rate and the loan's amortisation schedule, and be provided before the loan contract is executed.
Does the APR in a KFS include insurance and legal fees?
Yes. The RBI circular says the APR is the annual cost of credit including interest and all other charges, and that charges recovered on behalf of third parties, such as insurance or legal charges, shall also form part of the APR and shall be disclosed separately in the Key Facts Statement.
Can my lender charge a fee that was not in the KFS?
The RBI circular states that any fees or charges which are not mentioned in the KFS cannot be charged by regulated entities to the borrower at any stage without the borrower's explicit consent. Borrowers should compare the KFS with the sanction letter and keep a copy of both documents.
How long do I have to review a home loan KFS?
The RBI circular says that for loans with a tenor of seven days or more, the KFS must have a validity period of at least three working days. Home loans fall in this category, giving borrowers time to compare offers before executing the loan contract with the lender.
This article explains RBI circulars for general information and is not financial advice. Your lender's documents govern your loan.
Last updated 2026-11-09. PropNewz Team.
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