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How to read a Key Facts Statement (KFS) before you sign

6 min read
Man reading a document carefully, pen in hand

Short answer: A Key Facts Statement is a short summary of a loan’s terms, in a standard format. RBI rules say banks and NBFCs (finance companies that are not banks) must give it to you before you sign, for most loans to individuals and small businesses. It shows the amount, the interest, every fee, the APR (the yearly cost including fees), the number of payments and the total you’ll repay. Read four numbers first: the amount you actually receive, the APR, the EMI and the total repayable.

Why the KFS exists

Loan ads show the lowest number they can, like “rates from 10.99%” or “EMI just ₹999”. The KFS puts the full cost on one page in the same format for every lender. So you can put a bank’s offer next to an app’s offer and compare them fairly.

RBI’s main rules on the KFS apply to loans sanctioned (approved) from 1 October 2024. They are now part of RBI’s consolidated 2025 directions, which bring several older rules together:

  • The KFS covers retail and MSME (small business) term loans from banks and NBFCs, including loans taken through apps. A term loan is one you repay over a fixed period. Credit cards have separate rules.
  • The APR must include interest and all other charges. That includes third-party charges the lender collects from you.
  • If a charge is not in the KFS, the lender can’t take it later unless you clearly agree.
  • You get time to think. The KFS must stay valid for at least 3 working days for loans of 7 days or more, and 1 working day for shorter loans.

A sample KFS, explained

This is a Paisavy teaching example. Real KFS layouts follow RBI’s format but can look different.

KFS line Example What it tells you
Loan amount (sanctioned) ₹1,00,000 What you’re borrowing on paper
Total interest charge ₹6,619 Interest over the whole loan
Processing fee (incl. GST) ₹2,360 One-time fee, often taken out before you get the money
Insurance / other charges ₹1,200 Ask: must I take this, or can I say no?
Net disbursed amount ₹96,440 What actually reaches your bank account
Interest rate 12% p.a., fixed, reducing balance Fixed or floating? Reducing or flat?
Number of instalments 12 monthly —
EMI ₹8,885 Your monthly payment
Total amount to be paid ₹1,06,619 Principal (the amount borrowed) + interest
APR about 18.9% Cost including fees. Compare this number across lenders
Penal charges e.g. 2% p.m. on overdue amount What a late payment costs
Cooling-off / look-up period e.g. 3 days Time when you can leave the loan without a penalty (digital loans: at least 1 day)
Recovery agents Name/link to list Who may contact you if you fall behind
Grievance officer Name, phone, email The person you complain to first

Figures are only examples and are rounded. The “about 18.9%” APR assumes the processing fee and insurance are taken out of the amount paid out, and you repay 12 EMIs of ₹8,885. We worked it out as the monthly internal rate of return × 12, the same method as RBI’s KFS example. The fees are why it’s so much higher than the 12% interest rate.

The four-number check

  1. Net disbursed amount. This is the money paid out to you after deductions. Is it enough for what you need?
  2. APR. Compare two offers with a similar amount and tenure (loan length). The one with the lower APR is usually cheaper.
  3. EMI. Does it fit your weak month? (Use Can I afford it?)
  4. Total amount to be paid. Put it next to what you receive. The gap is the real price of the loan.

Red flags

  • There’s no KFS, or the lender says “we’ll send it after you sign”. Ask for it first.
  • The app or agreement shows fees that aren’t in the KFS.
  • You’re told to buy insurance or add-ons you didn’t ask for.
  • The APR is much higher than the advertised rate. That usually means heavy fees.
  • A flat rate (interest on the full amount for the whole loan) is shown as if it were a reducing rate. A 12% flat rate on a 1-year loan costs roughly what a 21% reducing rate would.
  • The app name is different from the lender’s legal name, and the KFS doesn’t explain the link. (See How to check a lender or loan app.)

If you’ve already signed

Digital loans have a cooling-off period of at least 1 day. In that time you can leave the loan with no penalty. You repay the principal and the APR for the days you had the money. The lender may keep a reasonable one-time processing fee, if the KFS says so. Your KFS shows how long your cooling-off period is.

Floating-rate loans to individuals for non-business purposes, sanctioned or renewed on or after 1 January 2026, can’t carry prepayment charges (fees for paying back early). For fixed-rate loans, check the KFS.

Keep your KFS. If you’re charged something that isn’t listed, raise it with the grievance officer named in it.

What to check today

  1. If you have a loan running now, find its KFS (in your email, the app or the loan papers). Write down the APR and the total repayable.
  2. If you’re comparing offers, put the four numbers from each KFS side by side.

Try it with your own numbers

→ EMI and total cost calculator: check the lender’s EMI and total interest. If our figures differ from the KFS, ask the lender why. Dates, fees or the way interest is worked out can all cause differences.

Sources and review

Try it with your numbers
EMI & total cost
Open tool →

Educational information, not financial advice. Found an error? Tell us → · Corrections log

Frequently asked questions

What is a KFS in a loan?

A KFS (Key Facts Statement) is a short summary of a loan's terms in a standard format. Banks and NBFCs (finance companies that are not banks) must give it to you before you sign, for retail and small-business term loans. That includes loans taken through apps. It shows the amount, interest, every fee, the APR, the number of payments and the total you'll repay.

Can a lender charge a fee that is not in the KFS?

Not unless you clearly agree. If a charge isn't in the KFS, the lender can't take it later without your consent. Keep your KFS safe. If your statement or app shows a charge that isn't listed, raise it first with the grievance officer named in the KFS. If that doesn't help, see How to complain about a bank, NBFC or loan app.

Why is the APR on my loan so much higher than the interest rate?

Because the APR (the yearly cost of the loan) adds the fees to the interest. In our sample KFS, the rate is 12% a year but the APR is about 18.9%. The processing fee and insurance come out of the money paid out. So you receive less but repay the same EMIs. An APR far above the advertised rate usually means heavy fees.

How long do I get to think before I accept a loan?

The KFS must stay valid for at least 3 working days for loans of 7 days or more. For shorter loans, it's 1 working day. Digital loans also have a cooling-off period of at least 1 day after you take them. In that time you can leave by repaying the principal and the APR for the days you had the money. The lender may keep a reasonable one-time processing fee, if the KFS says so.

What is the difference between a flat rate and a reducing rate?

A flat rate charges interest on the full loan amount for the whole loan, even as you pay it back. A reducing rate charges interest only on the part you still owe. So a flat rate costs more than it looks. A 12% flat rate on a 1-year loan costs roughly what a 21% reducing rate would. Check which one your KFS shows.

Do credit cards come with a KFS?

Not the loan KFS. Those rules cover retail and small-business term loans, and credit cards have separate rules. For card EMIs, the card company must show you the principal, interest and discount before it converts a purchase. The card's charges are listed in its MITC (Most Important Terms and Conditions). See No-cost EMI: is it really free?.