How to read your loan KFS in 3 minutes

KFS kya hai aur kyun zaroori hai

Key Fact Statement (KFS) is a one-page disclosure mandated by RBI that every regulated lender — bank, NBFC, or digital lender — must give you before you sign the loan agreement. It is the borrower's cheat-sheet: all the costs, the tenure, the true APR, and the cooling-off clause in one place. RBI made it mandatory under the Digital Lending Guidelines (September 2022) and standardised the format in April 2024 for all retail loans.

If your lender disburses money without showing you a KFS — that is itself a violation. You can file on the RBI Sachet portal.

The 10 rows that matter

Open the PDF the lender sends. You should see these labelled fields:

1. Loan amount applied — what you asked for.
2. Loan amount sanctioned — what they actually approved.
3. Amount disbursed to you — after deducting processing fee, GST, and any insurance premium. This is the cash that actually hits your bank.
4. Processing fee (₹ + % of sanction) — one-time, deducted upfront.
5. GST on processing fee — 18%.
6. Tenure (months / days) — how long until full repayment.
7. Interest rate (annualised, % per year) — RBI's required disclosure. Not the 'flat' rate.
8. APR — Annual Percentage Rate — the all-in cost including processing fee, GST, insurance, computed by the IRR method. This is the only number you should compare across lenders.
9. Total amount to be paid — principal + total interest + all fees.
10. Cooling-off period (in days) — how many days you have after disbursal to return the money and walk away. RBI mandates at least 3 days for most consumer loans.

The four-number test

Before you sign, look at four numbers only:

• APR — fair zone for personal loans 14–24%, NBFC 18–30%, small-ticket short-tenure 30–48%. Above 60% is predatory.
• Amount disbursed ÷ Loan sanctioned — if you receive less than 92% of the sanction, fees are eating too much.
• Total to be paid ÷ Amount disbursed — for a 1-year loan, anything above 1.30 = expensive. For 3 months, anything above 1.15.
• Cooling-off days — if it says 0, the lender is not compliant. Walk away.

SahiSujhav's EMI Truth Calculator computes the same APR the KFS should disclose — paste the four inputs and verify the lender is being honest.

Where lenders try to hide costs

• Insurance bundling — a "₹2,500 credit shield premium" deducted from disbursal is a real cost. It must be in the KFS APR. If it isn't, the APR shown is wrong.
• Convenience fee / platform fee — same as processing fee under a different name. Must appear in the KFS.
• Cashback / discount marketing — these don't change APR. The KFS is computed before any 'cashback'.
• 'Flat interest' — never trust a flat rate. A 12% flat for 12 months is roughly 22% APR.

Cooling-off period — your free return window

RBI's 2022 guidelines give you a minimum 3-day cooling-off period for most digital loans (the lender can offer longer). In that window you can return only the principal disbursed plus a pro-rata interest for the days you held it — no processing fee, no early-foreclosure penalty. Useful when you sign in panic and realise the next day the APR is 80%.

What to do if the KFS is missing or wrong

1. Email the lender's grievance officer in writing — RBI Fair Practices Code requires response within 30 days.
2. File on the RBI Sachet portal at sachet.rbi.org.in — attach the loan agreement and proof of disbursal.
3. If the app is unauthorised (no parent NBFC, no RBI registration), use the Harassment Checker and report to cybercrime.gov.in as well.

TL;DR

• KFS is the borrower's right under RBI's Sept-2022 guidelines, standardised April-2024.
• Compare APR across lenders, not 'interest rate'. APR includes processing fee, GST and insurance.
• Four numbers decide if the loan is fair: APR, amount-received ratio, total-paid ratio, cooling-off days.
• No KFS / cooling-off = file with RBI Sachet.

See also: True APR vs flat rate — the maths · Loan app reviews · Don't pay an unauthorised loan app