KFS & APR, explained
The Key Fact Statement is the one page a borrower is guaranteed to see. Getting it right is a compliance requirement — and quietly, a trust advantage.
What the KFS is
The Key Fact Statement (KFS) is a standardised disclosure document that RBI expects regulated lenders to give borrowers before loan execution. Its purpose is blunt: one page where the true cost and terms of the loan are visible without reading the agreement’s fine print.
For digital and short term lending the KFS matters even more, because the journey is fast. A borrower who tapped through an application in four minutes still has to see, in plain figures, what they are signing up for.
- Loan amount and net disbursed — what is sanctioned vs what actually lands in the account after deductions.
- All charges, itemised — processing fees, documentation and any other cost, with GST visible.
- APR — the annualised all-in cost of the loan, as a single comparable number.
- Repayment schedule — amounts and dates the borrower must pay.
- Recovery mechanism and grievance contact — what happens on default and where to complain.
Why APR on a short-tenure loan looks big
APR annualises the full cost of credit. When a loan runs 90 or 120 days, fixed charges like a processing fee get spread over a short period and then scaled to a year — so an APR of 40–50% on a small short-tenure loan is arithmetic, not necessarily predation.
This is precisely why the disclosure exists: two loans with the same headline rate can carry very different APRs once fees enter. A lender comfortable printing its APR is making a statement about its pricing.
Where lenders go wrong in practice
The common failures are operational, not intentional: a KFS generated from a template that drifted from the actual charge sheet; terms revised after approval without regenerating the disclosure; or a borrower e-signing an agreement whose numbers no longer match the KFS they saw.
The fix is structural — the KFS must be generated from the same data that drives the loan, at the moment of approval, and regenerated automatically whenever terms change, with the borrower re-consenting to the new numbers before signature.
How Loano handles it
On Loano the KFS (with APR illustration and MITC), sanction letter and agreement generate at approval, from the sanctioned terms, with the loan number printed. Revising terms before disbursal regenerates the pack and routes the borrower back through consent and e-sign — a stale disclosure cannot reach a signature.
None of this is legal advice; your compliance team owns the disclosure content. What the platform guarantees is the discipline: the numbers on the KFS are the numbers on the loan.
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